
Class Ji£Si^> 

Copyright^ 



COPYRIGHT DEPOSIT. 



MARSHALL'S 



Corporation 



and 



Voucher 
Accountin 



-by- 



Carl C. MARSHALL, 

Author of " Bookkeeping and Business Training," and joint author of the 
Ellis " Learning by Doing" Series. 



Cedar Rapids, Iowa: 

Goodyear-Marshall Publishing Co. 

1902. 



LIBRARY of CONGRESS 
Two Conies Received 

MAh it 190? 

». CoDyright Entry 
dO<sUF>.(7,'<?0l 
CLASS P\ XXc, No. 

COPY B. 



V\ V* ^ ^^ 



Copyright, 1901, 
Goodyear-Marshall Publishing Company. 



Marshall's Corporation and Voucher 

Accounting. 



CORPORATIONS. 

A Corporation is an organization of persons, specially authorized by law to act as one 
person. Corporations have certain general powers, rights, and responsibilities, which are specified 
by the law under which the corporation is created. 

A Charter is a formal document issued by the proper authority, setting forth the powers, 
purposes, and term of existence of a corporation, and by the issuance of which the corporation at- 
tains to a legal existence. 



-&■ 



Classification — Corporations are either Public or Private. Public Corporations include 
the persons of an entire community, as a city, or town, and are formed for governmental purposes. 
Private Corporations are those formed by the voluntary association of individuals, and include all 
corporations not public. 

Private corporations are further classified into: — 

I.. Religious, or those comprising churches or other religious societies. 

2. Benevolent, or those formed for promoting educational, charitable or fraternal undertak- 
ings, as colleges, fraternal societies, hospitals, etc. 

3. Commercial, or those organized for pecuniary gain, as the various companies formed for 
manufacturing, trade, transportation, and other business purposes. Commercial corporations are 
often spoken of as joint stock companies. 

We limit our attention here to commercial corporations, or companies. The powers, privileges 
and obligations of these organizations, vary considerably in the different states, and it is always nec- 
essary for those who form commercial corporations, to consult carefully the state or national laws 
under which the proposed company is to be organized. 

The StocK of a commercial corporation is the money or other capital which it is proposed to 
invest in the concern, and which is represented by a certain number of shares, usually of the denom- 
ination of #25, $50, or $100 each. An agreement to take or subscribe for these shares constitutes 
the first formal step in the organization of a corporation. 

Procedure in the Organization of a Commercial Corporation. 

Preliminary Discussion, Promotion, E,tc. — A corporation may be originated as 
an entirely new business enterprise, or it may be formed in order to make more effective a business 
already established as a partnership, or single proprietorship. Corporations are also frequently 
formed to combine a number of existing corporations, or other business concerns into a single com- 
pany. Combinations of this kind, are frequently, but improperly, spoken of as "trusts." 

The first step in the formation of a corporation, is an informal discussion among the proposed 
incorporators, as to the advisability of forming the company. Frequently the formation of a cor- 
poration is brought about through the efforts of some individual, who makes it his business to induce 
others to join in organizing the company. The business of bringing about the organization of com- 
panies in this way, is called "promoting," and the person who accomplishes it is known as a "pro- 
moter." The promoter of a corporation, usually receives a certain per cent of the stock as compen- 
sation for his services. 



CORPORATION AND VOUCHER ACCOUNTING. 



Minutes of Meetings. When the persons interested in the proposed corporation meet 
to discuss plans of organization, etc., a preliminary organization is usually effected, a temporary 
chairman and secretary being chosen. The secretary should prepare minutes of the meetings which 
are recorded in the "Minute Book." Any common blank book may be used for this purpose. If 
subsequent meetings are held, the minutes of the previous meeting should be read by the secretary, 
and, if no corrections are required, they are duly marked ''Approved" and are signed by the presi- 
dent and the secretary. 

An illustration of the minutes of a corporation meeting will be found on page 9. 

Stock Subscription Agreement. The first formal and legal step in the organization 
of a commercial corporation, consists in the signing of the Stock Subscription Agreement by the 
proposed incorporators. This comprises a mutually binding contract on the part of the several 
signers to take and pay for the shares of stock which each subscribes for. If the company is to be 
composed of many stockholders, a special book called a Stock Subscription Book may be used for 
this purpose, but more often the agreement is in the form of an ordinary legal document, which, 
when signed and witnessed (usually by a Notary Public) is filed in the secretary's office. (See form 
of Stock Subscription Agreement on page 9.) It is not necessary for the entire amount of capital 
stock to be subscribed before the corporation is formally organized. This may be done whenever, 
in the judgment of the incorporators, sufficient stock has been subscribed to insure the success of 
the company. 

Adoption of Articles of Incorporation. When a sufficient amount of stock has 
been subscribed, the incorporators hold a meeting, and proceed to perfect the organization of the 
company. This consists in the adoption of Articles of Incorporation. These should set forth: — 

1. The official name of the corporation. 

2. The purpose for which it is formed. 

3. The period of time for which it is organized. 

4. Its location, or place where its principal business is to be transacted. 

5. The amount of capital stock and the number of shares into which this is to be divided. 

6. The names of the officers and directors elected for the first official term. 

7. The name of the incorporators, whose signatures are duly attested by a notary public, or 

other competent officer. 

Other provisions may be added, as those relating to the duties and powers of the officers, the 
amount of indebtedness the corporation may incur, or any other general regulations of the cor- 
poration affairs which may be deemed advisable and which are not in conflict with the laws of the 
state in which the corporation is organized. 

The form on page 10 affords a fair illustration of Articles of Incorporation as usually adopted, 
but it should be remembered that these forms are subject to much variation. 

When Articles of Incorporation have been duly adopted, and signed by the incorporators, and 
the signatures duly certified to by a notary public or other competent official, the instrument is for- 
warded, with the required fee, to the office of the Secretary of State, where it is officially recorded, 
and the original copy, duly certified, is returned to the officers of the company, and becomes in the 
contemplation of the law, the charter, by the issue of which the corporation attains to a legal 
existence, and becomes competent to transact business under its corporate name. 

Powers and Liabilities. 

The powers, duties, rights, and limitations of corporations and of the individuals who com- 
pose them, are subject to considerable variation in the several states. Within the limits of the con- 
stitution, each state regulates corporations in its own way, and the student of these organizations 
should begin by studying the special laws of his own state, which provide the conditions and limita- 
tions under which they may be organized. Still, there are a number of general principles governing 
incorporated concerns which are substantially the same in all the states. 



POWERS, LIABILITIES, ETC. 



Powers. Among the general powers and rights of corporations are the following: 
i. The power of perpetual succession, or of corporate existence for the time named in its 
charter. 

2. The right to enter into contracts and to sue and be sued under the corporate name. 

3. The right to acquire and dispose of real estate, patents, copy rights, or other property, the 
same as a natural person. 

4. The right to possess and use a common seal for the certification of corporate acts by its 
officials. 

5. The right to adopt such bylaws or other rules for its government, as are not in conflict with 
its charter, or with the laws of the land. 

Voting and Elections. — The directors and other officers of a corporation are usually 
elected annually. The voting is generally by ballot, each stockholder having a number of votes 
equal to the number of his paid-up shares. 

Must Keep Books. — Corporations are usually required to keep duly certified records of 
all official acts, also books of account showing all business transactions. These records are open to 
the inspection of all stockholders. 

Liabilities. — Corporations, like individuals, are liable for the lawful acts of their agents, 
also for trespass or other wrongful acts committed by such agents or officers, when acting within 
their official authority. Corporations are also liable to their own stock-holders for any infringements 
of their rights, occasioned through the acts of Corporation officers, when acting within their au- 
thority. The general liabilities of corporations vary considerably in the different states, being mod- 
ified by the local laws. 

Liabilities of Stockholders. — The individual liability of stockholders for the debts 
of the corporation depends upon: (1) The form of incorporation; (2) the class of stock held; (3) the 
provisions of the charter ; and (4) the local statutes. With reference to individual liability, corpora- 
tions have been divided into : 

1. Unlimited Liability Corporations, or those in which each stockholder is personally liable for 
all debts of the corporation. 

2. Single or Limited Liability Corporations, in which the individual stockholders are liable only 
to the amount of their unpaid stock subscriptions. 

3. Double Liability Corporations, in which the stockholders are liable to the full amount of 

the stock subscribed for. 

Note— In some states, Limited Liability Corporations are required to affix the word "Limited" to 
their corporate name, whenever the same is publicly used. 

Corporation Finances. 

The profits or losses of a corporation are apportioned among the stockholders according to the 
amount of capital stock respectively held by them. 

Dividends are distributions of profits, being designated as a certain percentage of the stock 
upon which the distribution is based. Thus, by a "six per cent dividend" is meant such a distribu- 
tion of profits as will entitle each stockholder to an amount of profit equal to six per cent of the par 
value of the stock which he holds. 

Assessments are levies made upon stockholders, of a certain percentage of the stock held 
by them, the money thus raised being used for any legitimate purpose that may be decided upon by 
the management of the company. Assessments are usually made to cover deficiencies, or to meet 
expenses for which the available resources of the company are inadequate. 

An Installment is a part payment of a stock subscription. Sometimes stock subscriptions 
are required to be paid in full at a specified date after the subscription is signed, and sometimes the 
subscriptions are paid in installments of a certain per cent of the par value of the stock. Frequent- 
ly, paid-up stock is issued to certain of the stockholders for property transferred, or services ren- 
dered to the corporation. The time and manner of paying for stock subscription, is purely a matter 
of mutual contract among the stockholders. 



CORPORATION AND VOUCHER ACCOUNTING. 



Classes of StocK. Not all the stock issued by a corporation assures the same rights, 
privileges, and profits to the persons to whom it is issued, and this variation in the conditions and 
limitations under which stock is issued, gives rise to several classes of stock, the more important of 
which are here designated as follows : — 

i. Common Stock. This is the ordinary stock that is subscribed for when a company is or- 
ganized, and which is issued to the incorporators when paid for in accordance with the terms provided 
by the articles of incorporation. 

2. Treasury Stock. This is unissued stock that is reserved and held in the name of the com- 
pany, as an asset to be disposed of as the exigencies of the business may require. 

3. Preferred Stock. In the organization of a company, it is often desirable to issue a portion 
of the stock under conditions that shall entitle it to a regular specified dividend which is to be paid 
out of any accruing profits — and which must be paid, before any dividends are apportioned to 
the common stock. The stock thus favored is known as "Preferred Stock" or "Preferential Shares." 
If the stock is entitled to the dividend, whether or not any profits have been made, the amount being 
carried over from year to year, the total dividends for each year being finally paid when there are 
sufficient profits, the stock is known as "Cumulative Preferred" or "Guaranteed" stock. 

Preferred stock, however, is not entitled to any dividends in excess of the amount specified, and 
for this reason, it comprises a more stable and less speculative investment than the ordinary stock, 
which, under some circumstances, may earn a very high rate of dividends and under others, none 
at all. 

4. Donated Stock. This is stock which is contributed pro rata by the several stockholders, 
and to be sold for the purpose of raising needed funds to carry on the business. It is transferred to 
the company and held in reserve as an asset the same as Treasury Stock. 

Franchise. A franchise is any special privilege granted to a corporation by a municipal 
council or other law-making body. Franchises include such privileges as the right to use the streets 
of a city for a street car line, for water or gas pipes, telephone or electric lighting appliances, etc. A 
franchise is usually granted for a term of years, and is in the nature of a contract between the com- 
pany receiving it and the municipality by which it is granted. 

Bonds. Bonds are the written or printed obligations of public or private corporations, to 
pay specified sums of money, with .interest on the same, in accordance with the terms named in the 
instrument. Bonds usually run for a term of years, the interest being payable quarterly or semi-annual- 
ly, and represented on the instrument by detachable coupons, which are presented for payment as 
they mature. The bonds of private corporations are usually secured by mortgage, or other lien on 
the stock or other property of the corporation. 

The Earnings of a company are the receipts derived from carrying on its business. Gross 
Earnings are the total receipts; Net Earnings are the profits that are left after paying all expenses. 

Securities. This is a general term for Bonds, Notes, Stocks, etc. When such securities 
are deposited as a basis for loans, they are known as Collateral, and the operation of thus deposit- 
ing them is known as Hypothecation. 

Fund. This term implies cash that is set apart as a reserve for any specific purpose, related 
to the business of a corporation. The cash belonging to a company or a municipality is often distrib- 
uted, or classified into a number of funds, proportioned to the probable requirements of each, as the 
Contingency Fund, Reserve Fund, Salary Fund, Advertising Fund, Sinking Fund, etc. This method 
of disposal is sometimes a great aid in the systematic management of the corporation finances. 

Bonus. This is an amount either given or received by a corporation, on account of some 
special privilege or benefit growing out of its business. Thus, the people of a community may grant 
a bonus of cash or other property to a company in consideration of the general and public benefits 
arising from its establishment in the community as an industrial enterprise. On the other hand a cor- 
poration may pay a bonus to a city or town for the privileges conferred under its franchise. 



ORGANIZATION— BOOKS REQUIRED. 



Corporation Accountancy. 

In their application to corporation affairs, the principles of bookkeeping are the same as those 
employed in other business undertakings. The laws of debit and credit are of course universal in 
their application, whether the business be conducted as an individual or a corporate proprietorship. 

But the peculiar relations sustained by the members of a corporation to the business itself, the 
representation of the proprietorship interest by means of stock, and the method of apportioning losses 
and gains, give rise to a number of accountancy requirements and methods, that are not employed in 
individual or partnership concerns. 

With respect to bookkeeping requirements, corporations may be grouped into two general 
classes : — 

First, the so-called "close corporations," or those in which the stock is permanently held by a 
few individuals, there being few changes in the -personnel of the stockholders, and few or no trans- 
fers of stock. 

Second, the "open corporations," or those in which a considerable part of the stock is on the 
market, being commonly dealt in for speculative or investment purposes, there being a large number 
of stockholders, with frequent transfers of stock. Corporations of this class are, for the most part, 
heavily capitalized concerns, that do an extensive business, having their headquarters in some large 
city, with branch offices in other parts of the country. 

Of these two classes of corporations, the smaller, or close corporations, are much the more com- 
mon. They often consist of ordinary business partnerships that, for greater convenience and stabili- 
ty of operation, have been re-organized in the form o1 corporations. 

For obvious reasons, the acccoutancy methods adapted to the use of this class of companies, are 
of more importance to the average student than are those special books and devices that are used 
only by the great concerns, that have their offices in the larger cities. For this reason, the scheme of 
corporation accountancy given in the present course has been selected with a view to illustrate the 
needs of ordinary incorporated concerns such as are to be found in nearly every business community, 
and with the usual bookkeeping methods of which every student of accountancy needs to be familiar. 

The books and accounts required to be kept in a corporation business may be divided into two 
distinct groups : — 

i. The Corporation Books are those that relate to the stockholders as contributory 
proprietors and owners. These include the Installment Book, Stockholders' Ledger, Installment 
Ledger, Assessment and Dividend Book, etc. 

2. The Operating Books are those that relate to the general mercantile or industrial 
operations of the company, as the Journal, General Ledger, Cash Book, Sales Journal, etc., and which 
are kept in the same manner as though the business were not incorporated. We shall first offer a 
general description of the Corporation Books, and their purpose, and afterward illustrate the use of 
these in the case of a suppositional corporation. 

At the outset, it is well to emphasize the fact that there is much variation among corporations as 
to the form and kinds of books used. These will be determined by the nature of the business and 
the conditions under which the corporation is formed and conducted. 

Note— The corporation books described in the following pages, correspond to those that are to be 
used in conducting the affairs of the Central Canning and Drying Co.. hereafter to be introduced, and 
should be carefully studied. They will serve also to illustrate the methods of accounting usually em- 
ployed by the majority of incorporated business concerns. 

Books Required for the Organization of a Corporation. 

If the corporation represents the inauguration of a new business enterprise, several books and 
forms will be required, that may not be needed in the case of a company whose business has been 
previously conducted as an individual proprietorship or a partnership. In the latter case, paid-up 
stock is likely to be issued to the several stockholders as soon as the incorporation is formed, and 
there may be no necessity for either a Stock Subscription Book, or any provision for installments. 

Assuming, however, the formation of a corporation for the establishment of a business, in which 



CORPORATION AND VOUCHER ACCOUNTING. 



all or a part of the stock is to be subscribed and paid for in installments at such times as the 
capital may be needed in developing the business, it would be necessary at the time the first install- 
ment is payable, to open an 

Installment BooK. In this book the stock subscribers are listed each time an installment is 
called in, the several amounts due being recorded opposite their names, with columns for amount and 
date of payment, etc. A form of this book is shown on page 13. 

Note — Unless there are a large number of stockholders, and several installments are to be paid, it 
would be unnecessary to keep accounts of the installments in a separate book. Loose sheets could be 
used for each installment, these being afterward attached in the front part of the Installment Ledger. 

Installment Certificate Book. This book consists of Installment Certificates, or re- 
ceipts for installment payments, which are issued to the stockholders at the time the payments are 
made. These certificates are often referred to as "installment scrip." They are transferable, and 
when the final installment is paid, are surrendered and stock certificates are issued in their stead. 
See form on page 12. 

The Installment Ledger is a book in which each stockholder is charged with the par 
value of the stock for which he has subscribed (as shown by the Stock Subscription Book) and 
credited for the several installments as thev are paid, the latter being posted from the Installment 
Book. 

When the final installment is paid, the account is closed, the several installment certificates are 
surrendered, and a stock certificate for the full amount of the subscription is issued to the stock- 
holder, who is then credited in the Stockholder's Ledger for this amount. 

When an installment certificate is transferred, the person to whom it is transferred is debited for 
the number of shares covered by the certificate, and the person transferring them is credited. 

The Installment Ledger is merely an auxiliary and temporary book, its purpose being to give 
an exhibit of the various stockholder's accounts preceding the payment in full of their several stock 
subscriptions. When the subscribed stock is all paid for, the Installment Ledger ceases to be active. 
It would not be needed at all unless the stock subscriptions are to be paid in a series of installments. 
See form on page 14. 

Stock Certificates. When the stock subscribed for by any subscriber is paid in full, 
either by installments or otherwise, the secretary issues to him a Stock Certificate, as an evidence of 
such payment, and of his legal ownership of the stock represented by the certificate. 

The Stock Certificate Book contains the stock certificate blanks and corresponding stubs. 
These certificates are issued to stockholders when the stock represented by them is fully paid up. 
They are issued in such denominations as the stockholder may wish, usually in "blocks" of five, ten, 
twenty, or one hundred shares. See form on page 15. 

The Stockholders' Ledger. 

This book contains a record of all shares issued to the several stockholders, also of the cer- 
tificates surrendered, transferred, or re-issued. Its entries come from the Stock Certificate Book, 
and it should always show the exact amount of stock that is controlled by the several stockholders. 
See page 16. . 

Transferring Stock. 

At any time in the history of a corporation, it is likely that some of the prospective or actual 
stockholders may wish to transfer their interests, wholly or in part, to other parties. In fact, the 
right of a stockholder thus to transfer his interests, and without the consent of the other stockholders, 
is one of the principal distinctions between corporations and ordinary business partnerships. 

A stockholder may not, however, by the transfer of his stock, escape his liability for any cor- 
poration debts that exist at the time the transfer is made. Neither may a subscriber for stock that 
is partially paid up, escape liability for the remainder of the subscription, by transferring his Install- 
ment certificates. If the person to whom these certificates are transferred, defaults in the payment of 
the remaining installments, the company retains the right to collect them from the original subscriber. 






TRANSFERRING STOCK. 



The holder of either a stock or an installment certificate may transfer it by a proper and legally 
certified assignment, a form of which is usually printed on the back of the certificate. 

Transferring Installment Certificates. When an installment certificate is trans- 
ferred and the transferee presents it for record, the transferred certificate is cancelled (usually by 
writing across the face in red ink the word "transferred") and re-attached to its original stub. A 
new certificate for the same amount is then issued to the transferree. The person who made the 
transfer is then credited in the Installment Ledger for the amount of the stock transferred, and the 
account of the transferee is debited for the same amount. 

Should the holder of a certificate wish to transfer a portion of his holdings, and for an amount 
not represented by any certificate held by him, he first surrenders the certificate (or certificates) 
already issued, which is cancelled and re-attached to the original stub. Other certificates are then is- 
sued equal in amount to the certificate surrendered, and of whatever denominations are desired. 
The subscriber is credited in the Installment Ledger for the certificates surrendered, and debited for 
those re-issued. Either of the new certificates may then be transferred as previously explained. 

Transferring Stock Certificates. Stock Certificates are transferred in the same 
manner as installment certificates, but the entries made in the Stockholders' Ledger are just the op- 
posite of those required in the Installment Ledger, that is, when a stock certificate is surrendered the 
stockholder is debited, and when a certificate is issued the stockholder is credited. The reason for 
this difference is obvious, since, in the Installment Ledger, the holder is debited for stock subscribed, 
while in the Stockholder's Ledger he is credited for all shares issued. 

There should be records in the Installment Ledger or the Stockholder's Ledger for every cer- 
tificate issued, surrendered, transferred, or re-issued. For an illustration of the manner of recording 
transfers, see the account with R. C. Venable in the Installment Ledger on page 14, also in the 
Stockholder's Ledger page 16. 

The Corporation by-laws should always provide that transfers of stock shall be recorded in the 
corporation books. Otherwise, it would be impossible to know who the stockholders of a cor- 
poration are; neither would it be possible for the corporation bookkeepers to know what persons are 
entitled to dividends or liable for assessments, or for the officers to know the number of votes which 
the several stockholders are entitled to cast at elections, etc. 

When assessments are to be levied or dividends declared, it is customary to close the books 
against transfers for a short time before the assessment or dividend is to be paid. This is necessary 
in order that the bookkeepers may have time to make the proper apportionment among the stock- 
holders. 

Levying and Collecting Assessments. 

Stock may be assessable or non-assessable, according to the agreement under which it is issued. 
When assessments are permitted, they may be levied either by the directors of the corporation, or 
by a vote of the stockholders, as may be determined by the by-laws of the corporation or by the 
statutes of the state in which the incorporation was made. 

If assessments are not paid, the stock may, after due notice, be declared forfeited and may then 
be sold, the proceeds being used to pay the assessment, and the remainder, if any, being returned to 
the person whose stock was sold. There is much variation in the laws of the several states, as to 
the terms and conditions governing assessments and the forfeiture of stock for non-payment. 

Assessment Book. When an assessment has been decided upon, a list of the stock- 
holders is made in the Assessment Book, a form of which is shown on page 17. If there are but a 
few stockholders, and if assessments are seldom made, a special book is not required, an assessment 
list being simply made out on a sheet of paper ruled for the purpose. The assessment list shows 
the number of shares upon which each stockholder is assessed, the amount, date of payment, etc. 
The assessment lists are numbered in the order the assessments are made, the first list being "No. 
One," the second "No. Two," and so on. 



CORPORATION AND VOUCHER ACCOUNTING. 



Notice of Assessment. When an assessment has been levied, a proper notification, 
duly signed by the president and the secretary of the company, should be mailed to each stock- 
holder. 

The following would be an appropriate form for such notification: 

Hampton, Tll., June 17, 1901. 
Mr. N. A. Walters, Vinton, Iowa. 

Dear Sir: — At a legally called meeting of the stockholders of the Hampton Milling Co., which 
was held at the company's office in this city on June 15, 1901, it was decided by a majority vote of 
the stock represented at said meeting, to levy an assessment of five (5) per cent of the par value of 
all the common stock of said company, the same to be payable in cash to C. W. Moore, treasurer, at 
the company's office in this city, on or before July I, 190 1. 

It was further voted that piyments of said assessments, if not made on or before Aug. 1, 1901, 
should be declared delinquent, and that all stock upon which said assessments had not been paid 
should, after published notice, be sold at public vendue on Sept. 1, 1901, at two o'clock p. m. at the 
company's office in this city. 

The amount of the said assessment standing against your name as holder of Certificate No. 12, 
Fifty Shares, is Two Hundred and Fifty Dollars ($250) and you are hereby notified to pay the 
same in accordance with the terms of this notification. 

Very respectfully, 

J. B. Wilson, President. 
Chas. S. Blake, Secretary. 

Note. — In some states the law provides that notices of assessment may be legally made by pub- 
lication for a specified period in any newspaper of general circulation in the community where the 
company is located. 

Declaring and Distributing Dividends. 

Dividends are usually declared by a majority vote of the Board of Directors, and they can be 
legally paid out of accumulated profits only. 

When sufficient gains have been made to justify the declaring of a dividend, the books are 
closed in the usual manner, after which the Loss and Gain Account is closed into "Surplus" and 
"Dividend No. One," a journal entry being made in the following form: 

Loss and Gain $13767.25 

Dividend No. 1 1 2500.00 

Surplus. , 1267.25 

For net gains carried to Div. No. One and Surplus for a five per cent dividend on the issued 
stock, $250,000. 

Note.— The dividend accounts are designated by number, and in the order in which the several 
dividends are declared. 

A list of the stockholders is then made out in the Dividend Book, the several columns being 
filled out, as shown in the form of this book on page 17. 

When the dividends are paid, an entry is made on the credit side of the Cash Book as follows: 

Dividend No. 1 1 2500 

For dividends paid as per Dividend Book, page 17. 

Illustrative Example. 

To afford the student an illustration of the practical use of the books described in the preceding 
pages, and of the general procedure required, we now assume the organization ol a corporation, the 
Glendale Creamery Co., of Cedar Rapids, Iowa, and give in their order the assumed facts, and, in 
complete form, the various books and entries required. 

The student is recommended to study these books and entries carefully, and in connection with 
the description of the books as previously given. 



GLENDALE CREAMERY CO. 



Memoranda of the Glendale Creamery Co. 

1. 

A number of persons having interested themselves in the formation of this company, and prom- 
ises having been secured for sufficient stock subscriptions to justify its incorporation, the several in- 
corporators held a meeting for the purpose of effecting a temporary organization, and attaching their 
signatures to a Stock Subscription Agreement. 

The following minutes of this meeting appear on the Minute Book: 

Cedar Rapids, Iowa, March i, 1900. 

Upon the above date the proposed incorporators of the Glendale Creamery Co. held a meeting 
at the office of John S. Cooper, in the city of Cedar Rapids, for the purpose of attaching their signa- 
tures to a Stock Subscription Agreement, and for the purpose of taking steps for the permanent 
and legal organization of the company. 

John S. Cooper was elected chairman and T. S. Maynard secretary. 

The chairman then announced that promises had been secured for subscription of the entire 
amount of stock of the proposed corporation, and he suggested that before proceding further, the incor- 
porators present attach their signatures to the Stock Subscription Agreement, and that the same be duly 
certified to, and made a part of the company records. The suggestion was complied with, and sub- 
scriptions of stock to the amount of Fifty Thousand Dollars were duly signed and certified. 

Moved by Mr. Stacy that a committee of three incorporators be appointed by the chairman to 
prepare Articles of Incorporation, said committee to make its report at a meeting to be subsequently 
called by the chairman. The motion was carried and the following gentlemen were appointed by 
the chairman to serve on such committee : 

Chas. M. Stacy, Homer Allen, and M. F. Thompson. 

After some further informal discussion of the prospects and affairs of the proposed company, 
the meeting was adjourned subject to the call of the chairman. T. S. Maynard, 

Secretary. 

Approved March 5, 1900. 
John- S. Cooper, 

President. 

The following is the Stock Subscription Agreement, as signed and certified at the meeting re- 
ferred to : 

Stoch. Subscription Agreement. 

Cedar Rapids, Iowa, March 1, 1900. 
We, the undersigned, hereby subscribe for shares of stock in the Glendale Creamery Co., a cor- 
poration to be organized under the laws of the State of Iowa, the same to have a capitalization of 
Fifty Thousand Dollars ($50,000), to be divided into Five Hundred (500) Shares of One Hundred 
Dollars ($100) each. The said shares subscribed for are of the numbers and amounts hereunto set 
opposite our names, and are to be paid for in full under such rules as may hereafter be legally adopted 
by the incorporators of said company. 



NAME. 


RESIDENCE. 


NO. OF SHARES. 


AMOUNT. 


Chas. M Stacy 
Homer Allen 
R. C. Venable 
John S. Cooper 
M. F. Thompson 
T. S. Maynard 


Cedar Rapids, la. 
Marion, la. 
Marion, la. 
Cedar Rapids, la. 
Cedar Rapids, la. 
Cedar Rapids, la. 


One Hundred 

Fifty 

One Hundred and Fifty 

One Hundred 

Seventy-Five 

Twenty Five 


$10000 

5(1(111 

15000 

LOOOO 

7500 

2500 



10 CORPORATION AND VOUCHER ACCOUNTING. 

Personally appeared before me, a Notary Public in and for the County of Linn, State of Iowa, 
the persons whose names are hereunto recorded, and who in my presence voluntarily signed the 
same, as subscribers for stock in the Glendale Creamery Co., to the amounts set opposite their names 
in the foregoing Stock Subscription Agreement. 

In witness whereof, I have hereunto set my name and the official seal of my office, at the City 
of Cedar Rapids, County of Linn, State of Iowa, this first day of March, 1900. 

John S. Coopek, 

[seal] Notary Public. 

Note— The following Stock Subscription Agreement illustrates the form required for the incor- 
poration of a partnership business in which the partners are to receive paid-up stock for their respective 
interests, other stock being subscribed by outside parties. 

Stock Subscription Agreement for the Formation of the Delavan Hardware Co. 

Arcade, Wis., Jan. 1, 1901. 

We, the undersigned, hereby agree to subscribe for the number of shares and amounts of stock set 
opposite our names, in the Delavan Hardware Co., an incorporation to be formed under the laws of the 
State of Wisconsin, and ia accordance with the following conditions, to wit: The members of the firm 
of Delavan, Randall & Co., in consideration of the legal transfer of all their interest in the property, 
business and good will, or other resources of said firm, also their liabilities which are to be assumed by 
the rroposed incorporation, and all of which resources and liabilities are as set forth in the duly certi- 
fied financial statement, of this date already submitted and hereby accepted, are to receive and have 
issued to them paid up stock in said proposed incorporation, as follows: — 

Henry F. Delavan; Forty Shares, $4000. 

John S. Randall; Thirty Shares, $3000. 

Amos Long; Thirty Shares, $3000. 

The shares subscribed for by the undersigned and which are to be paid for in cash at their par 
value, and at such time as may be determined by the directors of the corporation, are as follows:— 

A. T. Smith; Ten Shares, $1000. 

S. H. Day; Fifteen Shares, $1500. 

P. S. Johnson; Twenty Shares, $2000. 

R. W. Miller; Five Shares, $500. 

2. 

At a subsequent meeting on March 5, 1 900, called to hear the report of the committee appointed 
at the meeting of March 1, a permanent organization was effected by the adoption of the following Ar- 
ticles of Incorporation and by the election of the officers named : 

Articles of Incorporation for the Glendale Creamery Co. of 

Cedar Rapids, Iowa. 

We, the undersigned, desiring to form ourselves into a body corporate, under the laws of the 
State of Iowa, do, for this purpose adopt for our organization, and as a basis for said incorporation, 
the following Articles of Incorporation. 

ARTICLE I. 

The name of this corporation shall be The Glendale Creamery Co., and its principal place of 
business shall be Cedar Rapids, in the County of Linn, State of Iowa. 

ARTICLE II. 

The purpose for which this corporation is formed is the carrying on of a general dairying and 
milk supply business, both wholesale and retail, and the manufacture and sale of dairy products of 
all kinds, also the acquisition of lands, buildings, machinery and such other property as may be nec- 
essary for carrying on the said business, and to do such other acts as are usually done in connection 
with t'ie management of said business. 

ARTICLE III. 

The amount of the Capital Stock of said corporation shall be Fifty Thousand Dollars ($50,000) 
to be divided into Five Hundred Shares of One Hundred Dollars ($100) each, the same to be issued 
only when paid for in cash or its equivalent. 



GLENDALE CREAMERY CO. 11 



ARTICLE IV. 

This corporation shall be deemed to be in legal existence, and its officers, qualified to do busi- 
ness in its name from and after the filing of these Articles of Incorporation, in the Office of the Sec- 
retary of State for the State of Iowa, due notice of the same having been received by the corporation 
secretary, and shall continue in existence thereafter for the period of twenty-five years, unless sooner 
legally dissolved. 

ARTICLE V. 

The officers of this corporation shall comprise a President, Vice President, Secretary, Treasurer, 
and a board of five directors, two of whom shall be the President and the Secretary of the corpora- 
tion, who shall respectively serve as the President and Secretary of the Board of Directors. These 
officers shall be chosen at the regular annual meeting of the corporation, and their terms of office 
shall continue until their successors have been chosen and have qualified. 

The duties of said officers shall be such as may be prescribed in the By-Laws of the corpora- 
tion, to be hereafter adopted by said Board of Directors, as hereinafter provided for. 

ARTICLE VI. 

The affairs of this corporation, in so far as they are not regulated by these Articles of Incorpor- 
ation or by the majority vote of the incorporators at any legal meeting, shall be under the control of 
the Board of Directors, who shall hold meetings, adopt By-Laws, and take such action as to the 
affairs ot the company, as may seem to them advisable. 

ARTICLE VII. 

The regular annual meetings of this corporation shall occur on the first Tuesday in April, of 
each year, at such place and hour as may from time to time be designated by the Board of Direc- 
tors. Until the occurrence of the first annual meeting, on the first Tuesday in April, 1 901, the fol- 
lowing persons are hereby elected to serve in the offices designated. 

President — John S. Cooper. 

Vice President — Homer Allen. 

Secretary — T. S. Maynard. 

Treasurer — Chas. M. Stacy. 

Directors — John S. Cooper, T. S. Maynard, M. F. Thompson, R. C. Venable, Chas. M. 
Stacy. 

ARTICLE VIII. 

At all stockholders' meetings, each stockholder shall have one vote for each share of stock 
owned by him, as shown by the books of the corporation. 

ARTICLE IX. 

The greatest amount of indebtedness for which this corporation shall make itself liable, shall not 
at any time exceed two-thirds of its capital stock. 

ARTICLE X. 

1 
The money of this corporation shall be paid out only by the treasurer, and upon warrants duly 
signed by the president and the secretary, and there shall be kept in the offices of the secretary and 
the treasurer, all needed books and accounts necessary to show plainly and completely the financial 
transactions of these officers, the same to be always accessible to any stockholder who may wish to 
inspect them during regular business hours. 



12 CORPORATION AND VOUCHER ACCOUNTING. 

ARTICLE XI. 

These Articles of Incorporation may be amended at any regular meeting, or at any meeting 
called for the purpose, by a two-thirds majority of all stock voted. 

Witness our hands this 5th day of March, 1901. John W. Cooper. 

T. S. Maynard. 

M. F. Thompson. 

R. S. Venacle. 

Homer Allen. 

Chas. M. Stacy. 

Note.— The Articles of Incorporation may contain any other general regulations that the stock- 
holders may wish to embody in them, but any minor matters, such as relate to the duties of officers, the 
order of business meetings, etc., should be included in the by-laws, the formulation and adoption of 
which are usually left to the Board of Directors. 

3. 

Upon the adoption and signing of the Articles of Incorporation, the document was recorded in 
the office of the County Recorder and a copy was sent for record to the office of the Secretary of 
State, accompanied by the legal fees. 

When the Articles of Incorporation were returned with the certificates of record duly attached, 
they constituted the "Charter" of the corporation, which now began its legal existence. 

4. 

Upon the receipt of the Charter, the President called a meeting of the Board of Directors, which 
was held on March 20, 1900, and at this meeting it was decided to call in an installment of twenty-five 
per cent of the stock subscribed, the same to be due and payable to the Treasurer on March 22, 1900. 

The Secretary also made out Installment Certificates for each stockholder, the accompanying 
form illustrating the one made out for Chas. M. Stacy : 

Form of Installment Certificate. 

~ ,. f . . Amount, $2500.00 ^Shares. 

Installment Certificate. 

Installment Certificate No...../ 
j^ Q j Issued by 

GLENDALE CREAMERY CO., 

March 21, 190 Cedar Rapids, lo\\\\, M. a . r ^L 2l ±.l^..°. 

This Certifies That ^.h^.:.J£:.§*?M\ 

„ , c has to his credit in the treasury of this Company the sum 

Per cent ^b - 

of Two Thousand Fvot Hundred Dollars, the same being 

the tJm^L .installment of 25 p er cen t f 100 shares 

No. Shares I 00 . due March 21, 1900 

This certificate is transferable only on the books of this com- 
$2500 00 pany, upon surrender of same by the holder or his lawful repre- 

Amount,.* . sentative. 

In evidence whereof we have duly affixed our signatures and 
Received the attached Certificate. the corporate seal this 21st day of March, 1900. 

T . S. Maynard, Secretary. Joh ^y^.:.9?.?P e Li. Px esident. 

ChtQjjtJStiw [SEAL] 



At this meeting action was taken as to the salaries to be received by the officers, a corporate 
seal was adopted, a superintendent and manager was elected, a committee of directors was appointed 



GLENDALE CREAMERY CO. 



13 



to report upon a site for the company's plant, and to advertise for plans for buildings, bids for 
machinery, etc. The secretary was also authorized to purchase any needed books or other office 
equipment that might be necessary for conducting the affairs of the corporation, the same to be paid 
for out of the first funds that should be paid into the treasury. The Second National Bank of Cedar 
Rapids was chosen as the bank of deposit for the corporation funds. 

5. 

The installments called for March 21, having been duly paid and certificates issued therefor, the 
Installment Book stands as follows: 



Installment No. i 



Comprising payments of an installment o f 2 5 per cent of the Capital Stock of Glendale Cream- 
ery Co., called for at a meeting of the Board of Directors on Mar. 20 1900, and due Mar. 21 1900. 



STOCKHOLDERS. 


NO. OF 
SHARES. 


AMOUNT. 


NO. OF 
CERT 


AMOUNT 
RECEIVED 


L. F 


DATE. 


Homer Allen 


50 


7250 


/ 


7250 


7 


March 21 


John W. Cooper 


100 


2500 


2 


2500 


7 


it a 


AT. F. Thompson 


75 


1875 


3 


1875 


7 


" 22 


T. S. Maynard 


25 


625 


4 


625 


7 


a a 


R. C. V enable 


150 


3750 


5 


3750 


2 


a (< 


Chas. M. Stacy 


100 


2500 


6 


2500 


2 


" 23 


Totals 


500 


12500 


12500 





6. 

On June 1, the directors issued a call for another installment of stock subscriptions to the 
amount of 50 per cent, payable June 10, which installment was duly paid by the stockholders. On 
Oct. 15, a call was issued for the third and final installment of 25 per cent, payable Oct. 20, which 
was duly paid, except the installment due from M. F. Thompson, payment of which was deferred 
until Dec. I. During this period, and before the final installments were paid, several transfers of in- 
stallment certificates had been made. 

The forms on page 14 illustrate the several Installment Ledger accounts as they appeared on 
Nov. 1. The student is advised to study each entry on these accounts, in connection with the 
memoranda of transfers. 

Notice that each account is debited for the shares originally subscribed and for each installment 
certificate subsequently issued; also, that each account is credited whenever an installment is paid or 
when a certificate is surrendered and cancelled. 

When all installments are paid or when a subscriber transfers all his stock, the account is 
closed. (Why is the account with M. F. Thompson not closed?) 

The following are the transfers of installment certificates made prior to the closing of the 
several accounts: 

Apr. 10, T. S. Maynard transfers his 25 shares to John \V. Cooper. 

Apr. 25, M. F. Thompson transfers twenty shares to Chas. M. Stacy. Mr. Thompson first 
surrenders his installment certificate No. 3 (for installment No. 1, 75 shares) and has two other cer- 
tificates issued to him (Nos. 8 and 9.) He is first credited for the unpaid portion of the shares sur- 
rendered (75 per cent of $7500, or $5625.) If he had transferred all his shares, his account would 
now be in balance, but as he wishes to transfer but twenty shares, he is charged for the unpaid 
part of the shares represented by the two new certificates to be issued to him, one for twenty and the 
other for fifty-five shares. As he now transfers the twenty shares, he is credited for the unpaid 
amount of these ($2000 x 75 per cent or $1500) and Mr. Stacy to whom they are transferred is 
debited for them. In studying these transfers, remember that the Installment Ledger must s/lOXV 
an entry for every certificate surrendered, transferred, or issued. 



14 



CORPORATION AND VOUCHER ACCOUNTING. 



Installment Ledger. 

CHAS. M. STACY, Cedar Rapids, Iowa. 







NO. OK 
SH'R'S 


SUBSCRIBED. 

RK ISSUED OR 

TRANSKERRKD BY 


PER 

CHNT 
IINP'ID 


NO OF 
CER. 


am'ts 

DR. 






CERTIFICATES SUR OR TRANS'D 


1 INSTALLMENTS PAID. 


DATE. 


DATE. 


NO OF 

sh'r's 


TRANSFERRED 
TO OR SUR. 


a 
y'o. 




HO 
I* 

1 

2 
3 


. ?■ 
gh.M 

*• - V) 

100 
120 

100 


h 

« z 

X i 

0. o 

25 
50 

25 


x 

a z 
u 

6 
15 

23 


AM'NT 
CR. 


1900 

Mar. 
Apr. 


1 
25 


100 
20 


Subscribed 

M. F. Thompson 


700 
75 


70 


10000 
1500 


1900 

Mar. 
June 
July 
Oct. 


23 

10 

6 

18 


20 


T. B. Spencer 


25 


70 


2500 

6000 

500 

2500 




11500 


11500 











HOMER ALLEN, Marion, Iowa. 



1900 














1900 






















Mar. 


1 


50 


Subscribed 


700 




5000 


Mar. 


21 










1 


50 


25 


1 


1250 


Sept. 
Sept. 


1 


25 


Reissued 


25 


17 


625 


June 


6 










2 


50 


50 


11 


2500 


1 


25 


<< 


25 


18 


625 


Sept. 


1 


50 


Surrendered 


25 


1-11 










1250 














Sept. 


1 


25 


R. C. V enable 


25 


17 










625 
















Oct. 


21 










3 


25 


25 


24 


625 




6250 


6250 




— 









R. C. VENABLE, Marion, Iowa. 



1900 
Mar. 
Sept. 



150 
25 



Subscribed 
Homer Allen 



100 
25 


19 


15000 
625 

15625 


17 900 
\Mar. 
\june 
'Oct. 


22 

8 
17 






\ 







1 


150 


25 


5 






2 


150 


50 


13 






3 


175 


25 


22 



3750 



15625 



JOHN W. COOPER, Cedar Rapids, Iowa. 



1900 

Mar. 
Apr. 


1 
10 


100 
25 







Subscribed 
T. S. Maynard 



100 
75 



10000 
1875 

11875 



1900 
Mar. 
June 
Oct. 



21 
7 

16 







1 


100 


25 


A 






2 


125 


50 


12 






3 


125 


25 


21 



2500 

6250 

3125 

11875 



M. F. THOMPSON, Cedar Rapids, Iowa. 



1900 
Mar. 
Apr. 
Apr. 



75 
20 
55 



Subscribed 
Reissued 









1900 






100 




7500 


Mar. 


22 




75 


8 


1500 


Apr. 


25 


75 


75 


9 


4125 


Apr. 
June 


25 
9 


20 



Surrendered 
Chas. M. Stacy 







1 


75 


25 


1 
3 


75 


3 










75 


8 














2 


55 


50 


14 

i 



7875 
5625 
1500 
2750 



T. S. MAYNARD, Cedar Rapids, Iowa. 



1900 
Mar. 1 



25 



Subscribed 



100 




2500 


1900 
Mar. 
Apr. 


22 
10 


25 


2500 









John W.Cooper 





| 


1 


25 


25 


4 


75 


4 











625 
1875 

2500 



T. B. SPENCER, Vinton, Iowa. 



1900 
July 


6 


zo 


Chas. M. Stacy 


25 


16 


500 


1900 
Oct. 


15 

















20 



25 



20 



500 



GLENDALE CREAMERY CO. 



15 



July 6, Chas. M. Stacy transferred twenty shares (Cer. No. 10) to T. B. Spencer, Vinton, Iowa. 

Sept. I , Homer Allen transferred twenty-five shares to R. C. Venabie. 

Whenever a subscriber paid his final installment the secretary issued to him a stock certificate 
representing the total number of paid up shares to which he was entitled. 

The accompanying form illustrates the certificate for ioo shares that was issued to Chas. M. 
Stacy when he paid his final installment on Oct. 1 8. At this time Mr. Stacy's account in the In- 
stallment Ledger being in balance, is ruled up and closed. An account with him is immediately 
opened in the Stockholder's Ledger, and he is credited with his 300 shares of paid up stock. 

Form of StocK Certificate. 



Certificate No. 



Out 



nnnnnnnnnnnnnncnnnnnnnnnnDnnnnnnnnnnnnnnnnnnnnnnnnnnnnn 



For One jiundred shares 

ISSUED TO 

Chas. M Stacy 

Cedar Rapids, la. 



Dated 



Oct. j8 



-I90o 



FROM WHOM TRANSFERRED 



Dated 



No. Original No Original 
Certificate I Shares 



190 

No. of Shares 
Transferred 



One 



Received Certificate No. 

for Shares 



this^^day ff f October W° 

Chas. M. Stacy 



□ 
□ 
□ 
□ 
n 

D 

n 

□ 

Q 

° 5 

n = 

□ " 

□ <& 

□ S 



□ S 
D > 

n n 

□ • 

□ 

D 

□ 
n 
n 
□ 

□ 

D 

□ 
□ 
D 



Glendale Creamery Company 



STfVTE OF 

Capital Stock $5°< ° - 00 

This Certifies That 
One Hundred^ 



Iowa 



is the owner of 



Certificate No 

Chas . M. Stacy 

-Shares of the Capital Stock 



c the Glendale Creamery Company 



fully paid, transferable only on the Books of the Corporation, by him or his attor- 
ney, upon surrender of this Certificate. 

In Witness Whereof the officers of this Corporation have hereunto 
subscribed their names and caused the Corporate Seal to be hereto affixed at 

Cedar Rapids, la. thiK iSth A nf October 1Qn o 



T. S.MAYNARD 



JOHN IV. COOPER 



Secretary Pretident 

nnnnnnnnnnnnannnnnnnnnnnnnnnnnannnnnannnaDnnDnnnnDnnnnn 



□ 
a 
a 

□ 
□ 
□ 
a 
□ 
□ 
a 
□ 
□ 
□ 
□ 
□ 
□ 
□ 
a 
□ 
□ 
□ 
a 
□ 
a 
a 
a 
a 
□ 
□ 
n 
□ 
a 
□ 
a 
a 



7. 



The forms on page 16 show the several accounts in the Stockholder's Ledger as they 
appeared on March 1, icjor.and after the following transfers of stock had been made : — 

November 1 5, T. B. Spencer to J. M. Stokes of Marion, Iowa, 20 shares. 

December 28, M. F. Thompson to Homer Allen 55 shares. 

January 25, 1901, R. C. Venabie to J. W. Cooper, 50 shares. Mr. Venabie surrenders his 
certificate No. 3 for 175 shares and has four other certificates issued, three for 50 shares, and one for 
25, transferring one of the former to Mr. Cooper. 

8. 



On March 1, 1 901, a special meeting of the Board of Directors was called to consider the 
finances of the company. It was found that the available capital had been largely expended in the 
purchase of plant, machinery, stock, etc , and that the payment of obligations soon to mature would 
produce a deficit in the funds. As it would be several months before profits 'would begin to accrue 
from the business, it was voted to levy a cash assessment of ten per cent on the capital stock, the 
same to be due and payable on or before March 15, 1901, and to be declared delinquent if not paid 
by May I, 1501. 

An assessment list was accordingly made out, and the form on page 17 shows this list as it 
appeared on the day of delinquency, May 1, 1901, 

2 



16 



CORPORATION AND VOUCHER ACCOUNTING. 



Stockholders' Ledger. 

T. B. SPENCER, Vinton, Iowa. 





SHARES TRANSFERRED OR SURRENDERED. 


SHARES 


ISSUED, RE-ISSUED OR 


TRANSFERRED. 


DATE. 


NO OF 

sh'r's 


TRANSFERRED TO 


NO. OF 
CERT 


AMOUNT DR. 


DATE. 


NO. OF 
SH'R'S 


TRANSFERRED BY 


NO, OF 
CERT 


AMOUNT CR. 


1900 
Nov. 


15 


20 


J. M. Stokes 


/ 


2000 


Oct. 


21 


20 


Issued 


/ 


2000 








1 









JOHN W. COOPER, Cedar Rapids, Iowa. 



, 












1900 
























Oct. 


16 


125 


Issued 


2 


12500 














1901 
























Jan. 


25 


50 


R. C. Venable 


13 


5000 



R. C. VENABLE, Marion, Iowa. 



1901 












1900 












Jan. 


25 


175 


Surrendered 


3 


17500 


Oct. 
1901 


17 


175 


Issued 


3 


17500 




25 


50 


J. W. Cooper 


11 


5000 


Jan. 


25 
25 
25 
25 


50 
50 
50 
25 


Re-issued 

<< 
a 


9 
10 
11 
12 


5000 

5000 
5000 
2500 



CHAS. M. STACY, Cedar Rapids, Iowa. 



Oct. 



19 100 Issued 



10000 



HOMER ALLEN, Marion, Iowa. 















1900 
























Oct. 


21 


25 


Issued 


5 


2500 














Dec. 


28 


55 


M. F. Thompson 


8 


5500 



M. F. THOMPSON, Cedar Rapids, Iowa. 



1900 
Dec. 



28 



55 



Homer Allen 



5500 



1900 
Dec. 



55 



Issued 



5500 



J. M. STOKES, Marion, Iowa. 



1900 
Nov. 



15 



20 



T. B. Spencer 



2000 



GLENDALE CREAMERY CO. 



17 



Assessment List No. One. 



For Ten (10) per cent of the Capital Stock of the Glendale Creamery Company, levied March 
i, i go i, and due March 15, 1901. Delinquent May 1, 1901. 



STOCKHOLDERS. 


ADDRESSES. 


NO OF 

sh'r's 


AMT. OF 
ASSESSMENT. 


AMT. PAID. 


DATE. 


REMARKS. 


John W. Cooper 


Cedar Rapids, la. 


175 


1750 


1750 


Mar. 


16 


Cash 


R. C. Venable 


Marion, " 


125 


1250 


1250 


Mar. 


18 


Pd with note at 60 days 


Chas. M. Stacy 


Cedar Rapids, " 


100 


1000 


1000 


Mar. 


14 


Cash 


Homer Allen 


Marion, " 


80 


800 


800 


Mar. 


19 


Cash 


J. M. Stokes 


Marion " 
Totals 


20 


200 


200 


Mar. 


15 


Note at 30 days 




500 


5000 


5000 





Note: This list is made out from the Stockholders' Ledger, as it stood on the day the assessment 
is levied. Pending the preparation of an assessment list, the books are closed against stock transfers. 
At the time an assessment is paid, the stockholder is given a receipt for the amount paid. 

9. 

The plant having been in successful operation for a number of months, the books were closed on 
Nov. 1, 1901, when it was found that the net profits of the season amounted to $3256.75, that there 
was salable merchandise on hand to the amount approximately of $4000, and cash in bank, $8600. 
As there were no obligations, the discharge of which could not safely be met at maturity by future 
receipts, it was decided that the conditions warranted the declaring of a dividend. Accordingly the 
directors ordered that a Cash Dividend of five per cent of the capital stock be declared, the same to 
be due and payable on Nov. 15, 1901. Thereupon the bookkeeper made entries in the Dividend 
Book as per the accompanying form, and checks for the amounts due were mailed to the several 
stockholders. 

Dividend B00R. 



Dividend Nov. I, IQO 1. 



Dividend No. 7 - 
Payable Nov. 15, igo '■ 



Per Cent 5 



STOCKHOLDERS. 


ADDRESSES. 


NO. OF 
SHARES. 


AM'T OF 
DIVIDEND. 


WHEN PAID. 


REMARKS. 


John W. Cooper 


Cedar Rapids, la. 


175 


875 




Nov. 


15 


Check No. 85 


R. C. Venable 


Marion, " 


125 


625 




<< 


15 


" " 87 


Chas. M. Stacy 


Cedar Rapids, " 


100 


500 




« 


15 


" " 88 


Homer Allen 


Marion, " 


80 


400 




l( 


15 


" " 90 


J. M. Stokes 


(< it 

Totals 


20 


100 




U 


15 


" " 92 




500 


2500 





Note— Dividends may be paid at the company's office, the stockholders appearing personally, re- 
ceiving their money, and receipting for the same, or, especially if there are a number of stockholders, 
not all of whom may live near where the company's business is conducted, it may be found more con- 
venient simply to mail to each stockholder a check for the amount, which, when endorsed and returned, 
constitutes a sufficient receipt, The latter method is followed by most large concerns. 



18 CORPORATION AND VOUCHER ACCOUNTING. 

Entries Required by Transactions in the Foregoing 

Memoranda. 

1. As the company at the time of its organization owns no tangible property, no entry is re- 
quired until the first installment is paid. At this time entries are made on the debit side of the Cash 
Book for the several installments as they are paid, the following being the form of entry: 

Mar. 21. Subscription 375° 

For installment No. i paid by Homer 
Allen and John S. Cooper per Install- 
ment Book this date. 

These several entries are then posted to the credit of the Subscription Account in the General 
Ledger. When all the Installments have been paid, this account will stand credited with the lull 
amount of the capital stock. 

2. When the final installment is paid by a stockholder, and a stock certificate is issued, an en- 
try is made in the Journal, debiting Subscription and crediting Capital Stock. The following is the 
form of entry required : 

Oct. 1 6. Subscription 2000 

Capital Stock 2000 

For 20 shares issued to T. B. 
Spencer per Certificate No. 2. 

When all the stock has been issued and the several entries posted, the Subscription Account will 
be in balance and should be ruled up and the Capital Stock Account will stand credited with the 
entire amount of paid-up stock. 

3. When the Assessments levied on Mar. 5 are paid, Cash is debited to Assessment No. 1, as 
follows : 

Mar. 15. Assessment No. 1 for 10 per cent of l 7S° 

175 shares owned by John W. Cooper. 

When the assessments are all paid and the payments posted, the account with Assessment No. 1 
will stand credited with the whole sum levied, or $5000. The student" will note that this account, 
while representing a toss to the individual stockholders, stands for a gain to the corporation, since 
it represents an increase in the working capital of the corporation for which there is no corresponding 
outlay. Hence in closing the books, this account is properly included with the gains, although it 
represents an outlay on the part of the individual stockholders, for which there is apparently no re- 
turn. In reality, however, this account simply stands for an increase in the investment which is not 
represented by a corresponding enlargement of the Capital Stock. It is not really a loss to the stock- 
holders, since it, presumably, is devoted to making their business more valuable. Neither is it really 
a gain to the business, since it does not represent actual profits. 

Instead of levying an assessment when a corporation needs an increase in its working capital, it 
is now more usual to provide for a further increase of stock, or to issue bonds or other interest-bear- 
ing obligations upon which money may be borrowed. 

When an increase in the working capital is anticipated at the time the corporation is organized, 
a certain amount of the capital stock is withheld from subscription, and reserved as "Treasury" or 
"Surplus" stock, to be sold at any time when it may be required to increase the funds of the com- 
pany. Should it not be found necessary to sell this stock, it may subsequently de distributed among 
the stockholders in the form of a "Stock Dividend," certificates for the stock being issued, instead of 
cash, as in the case of an ordinary dividend. 



OPENING ENTRIES, ETC. 19 



4. At the time the books are closed preparatory to declaring the dividend as ordered on Nov. 1 , 
the Loss and Gain Account is closed into "Surplus" and "Dividend No. 1," as per the following 
Journal Entry : — 

Loss and Gain 3 256.75 

Dividend No. x 2500.OO 

Surplus 756.75 

For net gains carried to Surplus and Dividend No. 1, 
for per cent of issued stock, $50,000. 

When the dividends are paid the following credit entry is made in the Cash Book : — 

Dividend No. I 2 500 

For dividends paid as per Div. Book, page 1. 

When the above entries are posted, the accounts with Loss and Gain and Dividend No. 1 will 
be in balance and should be ruled up, while the Surplus Account will represent undistributed profits 
to the amount of $756.75, that may either be subsequently distributed by means of another dividend, 
or kept in reserve to cover possible losses, etc. 

The balance of the Surplus Account is treated as a liability when the books are closed. 

Entries for Other Conditions of Openings. 

To the Student. Study carefully the following conditions and the entries given, after 
which write up the required entries for the test exercises that follow. 

Condition Number One. 

A corporation is capitalized for $60,000; of this amount $50,000 is subscribed for, and the re- 
maining $10,000 is reserved as Treasury Stock. 

Required Entries. At the time the reserve is made this entry is made in the Journal: — 

Treasury Stock 10000 

Capital Stock . . IOOOO 

For amount of stock reserved to be disposed of as future exigencies may require. 

When Treasury Stock is sold, debit Cash (or whatever is received) and credit "Treasury Stock." 

When the Stock is issued, no entry is required in the Journal, since the Stock has already been 
passed to the Capital Stock Account. 

This method of entry will, when all stock is issued, leave the "Treasury Stock" account in bal- 
ance, and the "Capital Stock" account credited with the entire amount of issue. 

The Treasury Stock of a company may be sold for less or more than its face or "par" value, ac- 
cording as its market price, may vary. In this case the margin of discount or premium is carried 
to an account called "Stock Discounts and Premiums." 

The following entries illustrate those required when Treasury Stock is sold below or above par. 

Cash 4750 

Stock Discounts & Premiums 250 

Treasury Stock 5000 

For fifty shares of Treasury Stock sold this day at 5 per cent below par, and issued to F. M. 
Brown. 

Cash 2550 

Stock Discounts & Premiums 50 

Treasury Stock 2500 

For twenty-five shares Treasury Stock sold this date at 2 per cent, above par, to N. S. French. 



20 CORPORATION AND VOUCHER ACCOUNTING. 

Condition Number Two. 

The printing house of S. T. Jones & Co., that has been conducted as a partnership by S. T. 
Jones, James Long and A. H. Piatt, is to be incorporated, under the name of the Jones Printing 
Co., under a capitalization of $45,000, to consist of 900 shares of $50 each. 

Of these, the three partners are to receive 300 shares each of paid-up stock for their respective 
interests. The assets of the business, as turned over to the corporation by the partnership are as 
follows : — 

Cash $ 5000.00. 

Plant. (Presses, Machinery, type, etc.) 20000.00. 

Mdse. (Paper, blanks, and other salable products per Invt.) 3528.75. 

Bills. (Receivable notes ree'd. in settlement of outstanding accounts). 2348.20. 

$30876.95 

Required Entries. It is assumed that the partnership books have been closed, that a 
satisfactory adjustment of previous gains or losses has been effected, that the books previously used 
in the business are to be continued, and that the respective partner's accounts stand credited with 
the total amount of net capital as follows : 

S.T.Jones Cr. $10756.50. 

James Long ,. Cr. 9873 80. 

A. H. Piatt Cr. 10246.65. 



$30876.95. 



The following entry is now made in the Journal : — 



S. T. Jones, 10756.50 

James Long 9873.80 

A. H. Piatt 10246.65 

Franchise 14123.05 

Capital Stock 45000 

For capitalization of Jones Printing Co. a.'i this day agreed upon, and as per closing statement of 
the books of S. T. Jones & Co., for Jan. 15, 1901. The above entry, when posted, will close the 
partners' accounts, and leave the books in balance as follows: — 

Dr. Cr. 

Cash 5000 

Plant 20000 

Mdse 3528.75 

Bills. Rec 2348.20 

Franchise 14123.05 

Capital Stock 45000 

The Franchise Account, as here employed, shows the difference between the actual working 
capital of the business, and the Capital Stock. It may represent that part of the concern's resources 
which is implied by the term "good will," or it may stand for those "future prospects" which are 
assumed to render the total value of the business greater than the mere amount of its visible assets. 
The great majority of corporations are capitalized for amounts much beyond the inventories of their 
working capital, or assets, and the Franchise Account is a convenient title under which to include 
this seniorage of capital. 

Note —The Franchise Account is so called, because it frequently represents (especially in street 
car, gas, or other municipal corporations) the value covered by a franchise owned by the company. 



OPENING ENTRIES, ETC. 21 



Condition Number Three. 

The hardware business hitherto conducted by the partnership firm of Wade & Miller is to be 
incorporated under the name of the Western Hardware Co., according to agreement as follows: — 

The capitalization is to be for $40000, and to consist of 400 shares of $100 each. J. H. Wade 
is to receive 1 50, and E. B. Miller 100 paid up shares for their respective interests in the business to 
be incorporated. Other parties subscribe for stock as follows: — 

Arthur Nelson 50 shares. 

S. T. Boone 25 shares. 

S. Lindsay 15 shares. 

P. J. Norman 10 shares. 

Fifty shares are to be reserved as Treasury Stock, to be disposed of as the stockholders may 
determine. 

At the time of the incorporation, the resources and liabilities of the firm of Wade & Miller are 
as listed in the following statement : — 

Resources : 

Cash on hand and in bank 2568.20 

Mdse. per inventory 9256.90 

Chattels per inventory 1 562.10 

Real Estate, Store Building and Lot (estimated). . . 6000.00 

Bills Receivable 642.50 

Accounts Receivable 2429.40 

Interest accrued on accounts and notes 75-°° 

Liabilities : 

Bills payable ... 1 79. 

Accounts Payable 1 1 2 1 .40 

Interest accrued on notes 25. 

J. H. Wade, Partner 12132.55 

E. B. Miller, Partner 9076.1 5 



22534.10 22534.10 



It is decided that the stock subscribed shall be paid in in four equal installments one month 
apart, the first installment to be due and payable immediately. This installment is accordingly paid 
in Cash. 

Required Entries. When Wade and Miller receive their stock the following Journal entry 
is made : — 

J. H. Wade 12132.55 

E. B. Miller 9076.1 5 

Franchise 3791-30 

Capital Stock 25000 

For incorporation of Western Hardware 

Co. according to agreement fhis day entered 

into between J. H. Wade, E. B. 

Miller, Arthur Nelson, S. T. Boone, S. Lindsay, and 

P. J. Norman, and in accordance with an 

exhibit of the books of the firm of Wade & Miller as 

shown by closing statement of this date. 

This entry closes the partners' accounts, shows excess of capitalization over net assets, and 
credits capital stock with the whole amount of shares issued. 



22 CORPORATION AND VOUCHER ACCOUNTING. 

When the first installment of this subscribed stock is paid, debit cash to subscription; and when 
this stock is issued, debit subscription and credit Capital Slock in the Journal as in the case of the 
Glendale Creamery Co., page 18. 

The reserved Treasury Stock is shown by the following entry : — 

Treasury Stock 5000 

Capital Stock 5000 

For Fifty Shares of Treasury Stock in Western Hardware Co., which is reserved for future dis- 
posal as may hereafter be decided upon. 

Suppose that, after a time, it is decided that the sale of Treasury Stock is unnecessary, and 
the directors should order it retired. This would be done by the following Journal entry: — 

Capital Stock 5000 

Treasury Stock 5000 

For Fifty Shares reserved Treasury Stock retired this date. 

This entry would close the account with Treasury Stock, while the balance of the Capital Stock 
Account would show the amount of Capital Stock issued. 

Condition Number Four. 

Henry Bell, C. W. McCloud, and S. T. Smith have been conducting a tanning business under 
the firm name of McCloud, Bell & Co. They have decided to reorganize and incorporate their bus- 
iness under the following conditions: 

The concern is to be capitalized tor $30000, 300 shares of $100 each. The partners are to re- 
ceive paid up stock for their respective interests as follows: 

Henry Bell, 100 shares. 

C. W. McCloud, 60 shares. 
S. T. Smith, 40 shares. 

Of the remaining capital stock, 75 shares are to be subscribed for by other parties and the re- 
maining 25 shares to be held in reserve as Treasury Stock. The corporation is to be entitled "The 
McCloud Tanning Co." 

On Jan. 10, 1901, the subscription stock has been subscribed as follows: 

N. S Brown, 20 shares. 
Chas, Halloran, 25 shares. 
C. S. Atkins, 1 5 shares. 
A. L. McGuire, 1 5 shares. 

and the company was duly organized. 

The following statement of the transferred assets and liabilities is submitted and accepted: 

Assets.- 

Plant, machinery, tools, etc 6567.80 

Mdse., leather and hides on hand 5 2 50 

Operating products, tan bark, fuel, etc I2 75 

Notes Receivable 426.50 

Harmon Leather Co. on acct 397.20 

Liabilities : 

Notes Payable 157-90 

Union Market Co. on acct 1 29.50 



SPECIAL CONDITIONS WITH ENTRIES. 23 

On Jan. 15, a cash installment of 25 per cent of the subscribed stock is paid, and the certificates 
of stock agreed upon are issued to the original partners. 

At this time, a new set of corporation books are opened, the books of the former partnership 
being dispensed with. 

On Jan. 20, the remainder of the stock subscriptions are paid in cash, with the exception of the 
subscription of A. L. McGuire, who gives his note at 60 days with approved security. The stock is 
then issued in full to all subscribers. 

On Jan. 25, the 25 shares of Treasury Stock are sold to the Union Market Co., they receiving- 
credit for the amount due on their account and paying -cash for the balance. 

On Apr. 25, the concern being in need of further capital to develop the business, the stock- 
holders by mutual agreement, donated 20 per cent of the stock held by them, the same to be sold 
and the proceeds devoted to the business. 

On May 2, 20 shares ot the donated stock were sold at par to C. W. Johnson for cash. 

On May 16, 10 shares of the donated stock were sold at 5 per cent below par to Arthur Wil- 
liams, on his note at 30 days. 

Required ILntries. 

When the statement of assets and liabilities of the former partnership is rendered and accepted 
and the stock issued, the following entry is made in the Journal: 

Plant 6567.80 

Mdse 5250 

Operating Products 1 275 

Bills Receivable 426.50 

Harmon Leather Co 347.20 

Franchise, 6420.90 

Bills Payable 1 57.90 

Union Market Co 129.50 

Capital Stock 20000. 

For inventoried assets and liabilities this day transferred by the firm of McCloud, Bell & Co. to 
"'The McCloud Tanning Co." in consideration of 200 paid up shares of the stock of said corporation 
and which have this day been issued as per agreement to the members of said firm. 

In the foregoing entry no account is taken of the several partners' accounts, since these do not 
appear in the corporation books. Notice that the amount charged to Franchise is the difference 
between the sum of the assets, and the liabilities plus that portion of the Capital Stock issued to the 
former partners. 

When the first installment is paid, the following entry is made on the debit side of the Cash 
Book:— 

Subscription 1 875 

For cash installment (No. 1) by N. S. Brown, Chas. Halloran, 
C. S. Atkins, and A. L. McGuire per entries in Installment Book, 
this date. 

The Treasury Stock is provided for by the following Journal entry : — 

Treasury Stock 2500 

Capital Stock 2500 

For 25 shares Treasury Stock reserved. 

When the final installment on the subscribed stock is paid in, make debit Cash Book entry for 
oortion paid in cash as follows : — 

Subscription 4500 

For Cash installment No. 2, bal. due on stock subscriptions of 
N. S. Brown, Chas. Halloran, and C. S. Atkins, per Install- 
ment Ledger this date. 



24 CORPORATION AND VOUCHER ACCOUNTING. 



For the payment of remainder of A. L. McGuire's subscription with note, the following Journal 
entry is made : — 

Bills Rec 1 1 25 

Subscription 1 1 25 

For Installment No. 2, 75 per cent of A. L. McGuire's 
subscription of I 5 shares paid with his note of this date. 
Certificates of stock are then issued to the several subscribers, their accounts are closed in the 
Installment Ledger and opened in the Stockholders' Ledger, and the following Journal entry is made : 

Subscription 7500 

Capital Stock 7 500 

For 75 shares of paid-up subscription stock, issued this day 
as follows : — 

N. S. Brown, 20 shares. 

Chas. Halloran, 25 " 

C.S.Atkins, 15 

A. L. McGuire, 15 

When the twenty-five shares of Treasury Stock are sold to the Union Market Co., make the 
following Journal entry: — 

Cash . , 2370.50 

Union Market Co 1 29.50 

Treasury Stock 2500. 

For 25 Shares Treasury Stock issued this day to 
Union Market Co. and paid for with offset of amount due 
them on our account, and cash per balance. 

When the stock is donated by the several stockholders, the following Journal entry was made: 

Donated Stock 6000 

Loss and Gain 6000 

For 20 per cent of the capital stock contributed pro rata, 
by the several stockholders and this day assigned to the 
McCloud Tanning Co. to be sold for the benefit of the 
business. 

Note. — This method of raising necessary funds is often employed instead of levying an ordinary 
assessment. Like an assessment, the stock donated constitutes a clear gain to the business, since it is an 
acquired resource for which there is no corresponding outlay, and it is therefore debited and Loss and 
Gain is credited. It may be entered either at par or at its market value. The Donated Stock Account is 
credited when the stock is sold, and since it may be sold at variable prices, the account, when all the 
stock is sold, may show either a debit or a credit balance, according to whether it was sold for a greater 
or a less amount than that for which the account was originally debited. If a balance is shown when 
all the stock is sold, the account is closed into Loss and Gain. 

When the 20 shares are sold to C. W. Johnson, the following entry is made in the Cash Book 

Donated Stock 2000 

For 20 shares sold at par to C. W. Johnson as per Cer. No. 9. 

When the 10 shares are sold to Arthur Williams, the following Journal entry is made: 

Bills Rec 950 

Donated Stock 950 

For 10 shares sold at 5 per cent below par to Arthur 
Williams as per Cer. No. TO on his note at 30 days. 



PRACTICE EXERCISES. 25 



EXERCISES. 



Prepare entries (as specified) for each of the following schemes of Incorporation, referring, if 
necessary, to previous instructions. 

Note. — Use loose Journal paper for the following exercises and make no entries in your blank 
books. 

Corporation No. 1. 

The Lawndale Manufacturing Co. is incorporated on Jan. 15, 1901, for $75000 (shares of $100). 
Of this amount $60000 is subscribed as follows : 

C. R. Smith, 200 shares 

M.Wilson, 125 shares 

L. W. Neal, 1 50 shares 

I. N. Thayer, 75 shares 

A. C. Hill, 50 shares 

The remaining 150 shares are reserved as Treasury Stock. 

The subscription agreement is signed Jan. 15. 

On Feb. 1, Mr. Smith pays Cash for his stock in full, and the remainder of the stockholders pay 
a cash installment of 75 per cent. 

Mar. I they pay cash for the remainder, and their stock is issued. 

Apr. 15, 50 per cent of the Treasury Stock is sold at par for Cash to C. W. Jones. 

July 15, the remaining unissued Treasury Stock is retired. 

Jan. 1, 1902, the books show net gains to the amount of $12569.50 from which a cash dividend 
of ten per cent is declared and paid. 

Write all Journal and Cash Book entries required, with dates and explanations complete, and 
close net gains into Dividend and Surplus Accounts, as previously instructed. 

Corporation No. 2. 

H. B. Scott has been conducting a wagon and buggy manufactory which is to be incorporated 
under the name of The Scott Wagon & Buggy Co., as follows : — 

Capital Stock, $40,000 (400 shares). Mar. I, 1901, C. F. Miller subscribes 100 shares, and A. 
B. Clark and T. M. Cook 50 shares each. H. B. Scott has issued to him the remaining 200 shares 
paid up, in consideration of his transferring to the corporation the plant and equipment which are put 
in at the full valuation of the shares, $20000, and to be represented on the books by an account 
with "Plant and Equipment." 

Mar. 5, C. F. Miller pays cash for his shares, and on Apr. 1, A. B. Clark and T. M. Cook, re- 
spectively, pay their subscriptions, one half in cash and their notes at 90 days for the balance. 

July 1, the stockholders donate 10 per cent of their stock to be sold for the purpose of increas- 
ing the working capital. 

July 1 5, 40 per cent of the donated stock is sold at par to R. B. Bryan for cash. 

Aug. 1 , the remainder of the donated stock is sold to A. P. Lane, at 5 per cent above par. Mr. 
Lane pays $2000 in cash and his note at 30 days for balance. 

Dec. 1, the business shows a net profit of $3241.50, from which a cash dividend of five per cent 
is declared and paid. 

Make complete Journal and Cash Book entries for all transactions and closings. 



26 CORPORATION AND VOUCHER ACCOUNTING. 

Corporation No. 3. 

S. B. Marvin, L. Seymour and R. W. Evans have been conducting a grocery business under 
the firm name of S. B. Marvin & Co. They decide to incorporate the business under a capitalization 
of $30000, (600 shares of $50 each.) The corporation to be known as " The Western Grocery Co." 

For their present interest in the business, the partners are to receive stock as follows : — 

S. B. Marvin, 150 shares. 

L. Seymour, 175 " 

R. W. Evans, 75 " 

One hundred shares are to be taken by A. B. Snow and to be paid for in Cash, and the remain- 
ing one hundred shares are to be reserved as Treasury Stock. 

The above arrangement was effected and the shares issued May 1, 1901, and on this date the 
books of the partnership were closed, and then re-opened under the incorporation in accordance with 
the following statement : — 

RESOURCES. 

Cash 1565.20 

Mdse. (Invt. stock on hand) 8592.40 

Personal Accounts (per schedule) 4221.60 

Bills Receivable (notes on hand) 2567.25 

Chattels & Fixtures (Invt.) 759.20 

LIABILITIES. 

Per. Accts 657.40 

Bills Payable (notes and acceptances). . . . 540.55 

L. Seymour, Partner 6621.25 

S. B. Marvin, " 6564.30 

R. W. Evans, " 3322.15 



17705.65 17705-65 



July I , one half of the Treasury Stock is sold at par for cash to Henry Warner. 

Aug. 1, 30 shares of Treasury Stock are sold for cash at 2 per cent below par to Chas. Morton, 

Sept. 15, the remainder of the Treasury Stock is sold at 5 per cent premium to T. S. Brown, 
on his note at 60 days. 

Jan. 1, 1902, the books of the concern show a net gain of $3327.40 which is closed into Sur- 
plus, and a cash dividend of 5 per cent is declared and paid. 

Mar. 1, 1902, a second dividend of 6 per cent is declared and paid in cash. 

Give all Cash Book and Journal entries required to open the corporation books, also those relat- 
ing to the treasury stock and to the dividends. 



GENERAL REVIEW. 27 



General Review Quiz. 

To the Student: Prepare yourself to answer fully all the following questions. See how 
many you can answer without re-reading any of your previous instructions. If, however, you are in 
doubt as to the correct answer to any question, refer to the text again and study the matter carefully. 

When you feel that you are prepared to answer all the questions, report to your teacher who, if 
he is satisfied that you are ready to proceed with the actual accounting course, will direct you to 
commence with the work of the Central Canning and Drying Co., page 29. 

1. Define a corporation. 

2. What is a charter? 

3. What constitutes the charter of an ordinary commercial corporation ? 

4. Give an example of a public corporation. 

5. Name the three classes of private corporations. 

6. How are the powers and liabilities of corporations regulated ? 

7. Define corporation stock. 

8. What is a stock subscription agreement ? What should it set forth ? 

9. What is a promoter ? 

10. What is the purpose of a minute book, and by whom is it usually kept? 

1 1. How is the correctness of minutes verified ? 

12. May a company be formally organized before all the stock is subscribed? 

13. What general facts should be set forth by the articles of incorporation ? 

1 4. What procedure is usually necessary to give a corporation legal existence ? 

15. Name the general powers usual to corporations. 

16. Explain the voting rights of incorporators. 

17. Name the usual liabilities of corporations and their stockholders. 

18. With respect to the liability of stockholders, corporations are divided into what three 

classes? Define each. 

19. What are dividends, and how are they distributed? 

20. What are assessments, and under what circumstances are they usually levied? 

21. What is an installment ? 

22. Should a stockholder fail to pay an installment, what procedure may be taken ? 

23. What do you understand by common stock ? Preferred stock ? Guaranteed stock ? 

Donated Stock ? 

24. What class of stock usually has the most stable valuation? Why? 

25. What is a franchise? Give an example. 

26. What is a bonus ? 

27. What are bonds ? Securities ? 

28. Explain the meaning of the word "fund" as used in corporation affairs. 

29. Distinguish befween "close" and "open" corporations. 

30. The books required to be kept in corporation business are divided into what two general 

groups ? 

31. What is the purpose of an installment book ? 

32. Under what circumstances in the formation of a corporation would stock subscription and 

installment books be required ? When would special stock subscription and installment 
books be unnecessary? 

33. What is meant by installment scrip ? 

34. What does the debit side of the Installment Ledger show ? The credit side? 

35. What procedure is taken when a stockholder makes a final payment of his stock sub- 

scription ? 

36. Under what circumstances would an account in the Installment Ledger be closed ? 
37 '. What is a stock certificate ? 

38. When should an account be opened in the Stockholders' Ledger? When closed? 

39. What procedure is necessary when an installment certificate is transferred? When a 
stock certificate is transferred ? 



28 CORPORATION AND VOUCHER ACCOUNTING. 

40. What should the balance of an account in the Stockholders' Ledger always show? 

41. If a stockholder transfers an installment certificate, does he escape liability for the remain- 
der of his stock subscriptions? 

42. May a stockholder escape liability for corporation debts by selling or transferring his stock 
certificates ? 

43. By whom are corporation by-laws usually adopted ? 

44. Under what circumstances may the books be temporarily closed against stock transfers ? 
Why is this necessary ? 

45. If a stockholder fails to pay an assessment, what procedure may be taken ? 

46. How are stockholders usually notified that an assessment has been levied ? 

47. Under what circumstances and by whom may dividends be declared? 

48. Describe the procedure necessary when a dividend is to be declared ? 

49. What disposition is usually made of treasury stock that is not to be sold for the the benefit 
of the corporation ? 

50. How is a stock subscription agreement usually certified ? 

51. What officials usually have the management of the corporation affairs? How is their 
authority limited? 

52. How can a stockholder transfer a portion of the shares represented by a stock certificate? 

53. When does the installment ledger cease to be active ? 

54. How do corporations usually raise needed money, in case it is not desirable to levy an 
assessment? 

55. What is the purpose of the " Surplus" or " Reserve" Fund? Does it represent a resource 
or a liability on the books? 

56. How are dividends usually paid? 

57. What entry is made when a cash payment is made on a stock subscription? 

58. What does the Subscription Account represent? When is it finally closed? 

59. Should an assessment account be treated as a loss or a gain, when the books are closed? 

60. For what purpose is treasury stock usually reserved when the corporation is organized? 

61. When a cash dividend has been declared, what entry should be made ? 

62. What entry is made when dividends are paid in cash ? 

63. When would a dividend account be in balance ? 

64. What entry should be made when $25000 in Treasury Stock is reserved? When it is sold 
for cash at 2 per cent below par ? At 5 per cent above par ? 

65. What entry is made when Treasury Stock is retired? 

66. What is the purpose of the Franchise Account ? 

67. When a partnership is incorporated, partners' accounts are closed into what account ? 

68. When an installment is paid by note, what entry should be made ? 

69. When the incorporators contribute their own stock to be sold for the benefit of the business, 
what entry is required ? 

70. Suppose the second dividend declared by the company were made payable in treasury stock, 
what entry would be required ? 



ORGANIZATION C. C. & D. CO. 29 



Organization and Business Transactions of the Central Can= 

ning and Drying Company. 

To the Student: In this course of practice in corporation bookkeeping, it is assumed that 
the firm of Douglas, Fenton & Co. have been conducting a canning and drying business at Hills- 
dale, O., and in order to enlarge their capital and further develop their business, have decided to in- 
corporate under the name of The Central Canning and Drying Co., which concern is to be organized 
and conducted as set forth in the memoranda that follows. It is also assumed that you are to act as 
Secretary and bookkeeper for the company. 

The various books and accounting methods to be employed will be described and illustrated as 
they are required. You are to be a subscriber for 125 shires of the corporation stock, and you are 
to use your own name in all entries, etc., where the word "student" is used. 

Memoranda {Beginning July 1, ipoi.) 

An informal preliminary meeting of the proposed incorporators is held at the office of Douglas, 
Fenton & Co. Present: Chas. T. Fenton, James Douglas, Geo. P. Morton, A. F. Hanlon, L. M. 
Barnes, and Student. 

Mr. Fenton is chosen temporary chairman, and Student, Secretary. 

General and informal discussion of plans for forming corporation. 

Motion by Mr. Douglas that a committee of three be appointed by the chairman to prepare 
plan of proposed organization, said committee to render its report to the proposed incorporators at a 
meeting to be held July 6, at 7:30 p. m. Motion carried unanimously. Chairman appoints the fol- 
lowing persons to serve on said committee: James Douglas, Geo. P. Morton, and Student. Meet- 
ing adjourned to meet at same place, July 6, at 7:30 p, m. 

Write in your Minute Book, in due form, the minutes of this meeting. 

July 6. 

Meeting to hear report of committee on organization. This report, as submitted and adopted 
by vote, is as follows: 

1. That a corporation is to be formed under the laws of the State of Ohio, and to be known as 
"The Centra! Canning and Drying Company," the business of which is to be the canning, drying, or 
otherwise preserving of fruits, vegetables, meats, or other food products. 

2. That the company is to be capitalized for $250,000 in shares of $100 each. 

3. That $200,000 of the stock is to be subscribed for at once, and $50,000 to be reserved as 
Treasury stock and sold hereafter, or retired, as may be determined by the management. 

4. That $100,000 of paid up shares are to be issued to the members of the firm of Douglas, 
Fenton & Co. of Hillsdale, Ohio, as follows: 

Chas. T. Fenton, 375 shares. 

James Douglas, 250 " 

A. F. Hanlon, 250 

L. M. Barnes, 125 

These shares are to be issued to said persons as a full equivalent for their respective interests in 
the common property and business belonging to said firm, located at Hillsdale, Ohio, and which, 
after its organization, is to belong to the Central Canning and Drying Co. 

5. That upon the subscription of the remaining $100,000 of the capital stock by responsible 
persons, the incorporators here present, bind themselves to the formation of the proposed incorpora- 
tion in accordance with the terms herein set forth. 

After some general discussion, the report of the committee, as above outlined, was adopted by 
unanimous vote. 

The Secretary was then, on motion, instructed to draw up a stock subscription agreement in ac- 
cordance with the foregoing terms, and a committee consisting of Geo. P. Morton and L. M. Barnes 
was appointed by the chair to circulate this subscription agreement for the purpose of securing the 
required subscribers for the proposed capital stock. Meeting then adjourned subject to the call of 
the chairman. 



Henry T. Bell, 


75 shares 


Arthur Moore 


250 " 


E, P. Moody 


175 " 


75 shares 





30 CORPORATION AND VOUCHER ACCOUNTING. 

Write up the minutes for this meeting, which should include a full and formal report of the com, 
mittee. See page 9. 

Draw up the Stock Subscription Agreement, and subscribe your own name, after which your 
teacher will have the remaining signatures attached, which represent the persons, whom it will be 
assumed have duly subscribed for the number of shares set opposite their names. For form of Agree- 
ment see Note, page 10. 

Student 125 shares 

Geo. P. Morton 200 

J. S. Miller 100 " 

John A. Martin 

July 12. 

The canvassing committee having reported that the required stock subscriptions had been ob- 
tained, the Chairman called a meeting of the incorporators to take steps for the legal formation of 
the corporation. 

After some general discussion, the Secretary was directed to draw up Articles of Incorporation 
in accordance with the terms already agreed upon, adding such other details as might be necessary 
and submit the same for adoption by the incorporators. 

The following officers were then elected for the first official term, beginning with the formation 
of the corporation and ending July 1, 1902: 
President — A. F. Hanlon. 
Vice President — Geo. P. Morton. 
Secretary — Student. 
Treasurer — James Douglas. 
Directors — A. F. Hanlon, Geo. P. Morton, Arthur Moore, James Douglas and Student. 
Meeting then adjourned to re-convene at the same place on July I 5 at 7:30 p. m. 
Write the minutes for this meeting, after which, prepare Articles of Incorporation following in a 
general way the form given on page 10, but observing the terms as agreed upon and set forth in the 
minutes. Fix the time of incorporation at twenty-five years, and the place of business, Hillsdale, 
Ohio. After preparing the Articles of Incorporation, submit the document to your teacher for in- 
spection, who will have affixed the signatures of the incorporators. 

Note— In the case of an actual corporation, it'would now be necessary to forward the Articles of 
Incorporation to the Secretary of State for registry, and perhaps also to the Clerk, or Recorder, of the 
county in which the incorporation is formed. In the case of your present work, it will be assumed that 
this has been done, and that the necessary fees have been paid personally by the Secretary. An itemized 
list of these preliminary expenses will be given later. 

July 20. 

The corporation having received its charter (the Articles of Incorporation as returned with the 
Certificate of Registry by the Secretary of State) and having therefore attained to a legal existence, 
a meeting of the Board of Directors was held at which the following business was transacted. 

1. The Board was organized by the election of A. F. Hanlon as President and Student as 

Secretary. 

Note— The president and secretary of a corporation usually serve, respectively, as president and 
secretary of the Board of Directors. 

2. A committee, consisting of James Douglas, Geo. P. Morton, and the student, was appointed 
to draft By-Laws for the government of the corporation. 

3. It was voted to call for the immediate payment in cash of an installment of twenty-five per 
cent of the subscribed stock. 

4. The Secretary was directed to issue certificates of stock to all persons entitled to the same, 
as required by the Stock Subscription Agreement, also to secure and open a set of corporation books. 

5. The following employes were elected, with salaries as specified: 

Superintendent, L. M. Barnes, salary $2,500 per year 

Secretary and Accountant, Student, " 2,000 " " 

Auditor and Treasurer, James Douglas, 2,000 " 

Time Keeper and Clerk, J. M. Davis, " 1,500" 



VOUCHER SYSTEM. 31 



Buyer, E. P. Moody, salary $2,000 per year. 

John A. Martin, Traveling Salesman. " 1,500 " " 

Charles Baker, " " " 1,500 " " 

A. W. Long, " •' " 1,200 " 

Meeting adjourned subject to call of chairman. 

Write up, in due form, the minutes of this meeting, after which make out the required stock 
certificates for each of the stockholders, who are entitled to receive paid up stock, and deliver the 
same, through the envelope marked "Stock Certificates Delivered." 

Open accounts in the Stockholders' Ledger with these stockholders, crediting each with the 
number and amount of shares issued. Index these accounts at the time you open them. For form 
of stock certificate and Stockholders' Ledger see pages 15 and 16. 

The Operating Books of the Central Canning and Drying Co. 

The operating books for this business include a Journal, Sales Journal, Cash Book, Voucher 
Payable Register, Petty Expense Book, General Ledger, and Sales Ledger. 

The first four of these are what are known as "special column books" and are adapted to the 
peculiar requirements of this business. The student should bear in mind that all large business con- 
cerns adopt methods of account-keeping and the forms and kinds of record books that are best 
adapted to the special requirements of their own business. One of the purposes of the present course 
is to familiarize the student with the more usual methods by which this is accomplished. 

The following pages include forms and descriptions of the operating books to be used You 
will study these books and their descriptions only as you are directed to do so in the memoranda of 
transactions, which are continued on page 40, and to which you will now refer for a continuation of 
your work. 

The Voucher System of Accountancy. 

This is a system that has come into use in recent years, and is particularly adapted to large in- 
dustrial and manufacturing concerns, electric lighting and street car plants, etc. 

It derives its name from the fact that accounts with certain classes of creditors are kept by 
means of receipted records called Vouchers, used in connection with a specially ruled book called 
a Voucher Payable Register. When payments are made on account of purchases or other ex- 
penditures, a voucher is issued and delivered to the person or firm to whom payments are made, 
together with the cash, check, note, draft, acceptance, or other instrument through which the 
payment is made. The voucher is afterward signed and returned by the person or firm receiving 
the payment, and is placed on file as an evidence of such payment, as well as a memorandum of the 
expenditure. 

The form of voucher illustrated on page 32 shows that the Central Canning and Drying Co. has 
purchased of the Cleveland Fruit Co. 185 bushels of peaches on Aug. 20, 1901, for which cash pay- 
ment was made Aug. 24, 1901. 

The purpose of the stub is to preserve a record of the Voucher, should it be lost or not returned 
by the payee; also, to show the distribution of the amount paid among the several department ac- 
counts, for entry in the Voucher Payable Register. By some concerns these entries are made on 
the back of the voucher, and by others they are not made at all, the Voucher Register record being 
deemed sufficient. The use of the stub is more convenient, however, if the itemized records on the 
voucher are considered necessary. 

When goods are purchased on account, the voucher is duly made out, but is not detached from 
the stub and delivered for signature until payment is made. 

In case the invoice includes a large number of items, these are not entered on the voucher, but 
the amount only is recorded with an entry in the description column, "As per Invoice No. 17, 
rendered Jan. 10, 1901." 

Some concerns use vouchers for practically all expenditures required in the business, others use 
them only for certain classes of payments, as for material purchased for use in manufacturing 
processes, etc., and the cost of which it is desirable to keep in separate accounts. Vouchers are used 
either for cash or time purchases; if for the latter, the voucher is usually made out at the time the 
goods are received, and the bill verified, but is not forwarded to the creditor until the time of payment. 
In your present business, you will use vouchers for all purchases of material, also for other classes 
of expenditure as indicated in the memoranda. 



32 



CORPORATION AND VOUCHER ACCOUNTING. 






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Voucher Payable Register. 

This book contains a properly classified record of all payments evidenced by the vouchers. 
There are special columns for the various classes of materials purchased, also columns for Labor, 
Fuel, General Expense, or any other classes of expenditures of which it is desirable to keep separate 
records. 

The accompanying form of Voucher Payable Register is especially adapted to the business that 
is carried on by the student in the present course, but it must be borne in mind that the form of the 
book, the number of columns, etc., would vary with the nature and accountancy requirements of the 
business. 

The columns under "Canned Goods Accounts" represent four accounts which are to be kept in 
the General Ledger, and which may be designated " C. G. Raw Products," " C. G. Labor," etc., to 
distinguish them from the corresponding accounts of the Dried Fruit Department. The totals of the 
several money columns are forwarded to the next page as soon as any page is full. Periodically 
(usually at the end of each month) the totals are posted to the Ledger. 

The purpose in keeping these several accounts is to enable the management to know at anytime 
the total cost of each department of the business, which knowledge may enable them to reduce cost 
of production. In large concerns where there are many departments of cost'and finished product, it 
is usual to keep separate ledgers for the different departments, but in your present business, it will be 
sufficient to keep separate cost accounts in the General Ledger, and close these into the general de- 
partment account. 

Instructions will be given hereafter as to the manner of making these closings and inventories. 



OPERATING BOOKS. 



35 



VOUCHER PAYABLE. REGISTER. 



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As your course does not involve the use of business papers other than the vouchers and in- 
voices, you will not make out the checks that should accompany the vouchers, but will merely 
asstime that they have been duly made out and delivered with the voucher. In actual business, of 
course, the check would eventually be returned by the bank upon which it was drawn, while the 
voucher would be receipted and returned by the firm to whom it was issued. 

Disposal of Vouchers. When a voucher is received by a payee, if the check or other 
remittance accompanying it be correct, the check should at once be deposited for collection, and the 
voucher should be filled out properly and returned to the firm that issued it. When a receipted 
voucher is received, it is at once placed on file. 

Note.— In some offices, when the check used to pay a voucher is returned by the bank, it is at- 
tached to the voucher and filed with it. We do not see, however, that this course is necessary, and so 
far as our investigations extend, bat few houses follow it. The voucher itself is a sufficient receipt, and 
it seems unnecessary to interfere with the usual order of disposing of returned checks. 

In your present work, as you are not dealing directly with real persons, you may simply make 
out the voucher in proper form (using the book of vouchers included with your office stationery) and 
deliver it through the envelope marked "Vouchers Payable Delivered." Your teacher will instruct 
you as to the final disposal of these vouchers at the end of the week's business. In actual business 
they would be receipted and returned by the parties to whom they are issued, and then re-attached to 
their original stubs. 



36 CORPORATION AND VOUCHER ACCOUNTING. 

The Journal. 

The form on page 33 illustrates the Journal that is to be used in this course, and the method 
of using it. The form differs Irom that of the ordinary Journal, only in the introduction of the column 
for Sales Ledger Credits. 

Sales Ledger Credits Column. In this business, a separate ledger called a " Sales 
Ledger" is to be kept for all our accounts with customers. To enable us to know at any time the 
state of this Ledger as a whole, we carry special columns in the several books, for the debits or 
credits that go to this ledger, and keep a "Sales Ledger Account" in the General Ledger, to which 
the footings of the Sales Ledger Columns are posted at the close of each week. The " Sales Ledger 
Credits" column in the Journal is for any credits other than cash (such as notes, memoranda of 
credit, or the like) and which are not recorded in the other books. 

Recording Sales of Merchandise. 

Duplicate Bill Pad. In this business, the Sales Book is dispensed with, the itemized 
records of sales being kept in duplicates of the bills sent to the customers. This is done by means 
of a specially prepared bill pad with carbon copying sheet. In preparing duplicate bills, follow the 
directions on the cover of your Duplicate Bill Pad. 

Sales Journal. This book contains columns for the names and addresses of all persons to 
whom goods are sold, and whose accounts are to be kept in the Sales Ledger, also columns for the 
date, terms, amounts, etc. Separate columns are used for "Canned Goods" and "Dried Fruit." The 
"Sales Ledger Debits" column is for the amounts of the several purchases, and at the end of each 
week its total is posted to the debit side of the Sales Ledger Account in the General Ledger. The 
totals of the "Canned Goods" and "Dried Fruits" columns are posted to the credit side of the re- 
spective accounts in the General Ledger. 

The separate amounts in the "Sales Ledger Debits" column are posted to the customers' ac- 
counts in the Sales Ledger. See page 37. 

The Quotation Lists. The output, or product, of manufacturing establishments is usu- 
ally sold to large wholesalers or to jobbers, who in turn sell the goods to local dealers. The prices 
and terms will vary with the quantity purchased, the rise and fall of the market, etc. 

In the present business, the manufactured product consists of various brands of canned and 
dried fruits, jam, jellies, etc., which are designated in the Quotation Lists, and which are to be sold 
at the prices and terms given unless otherwise specified in the memoranda. Two cards — "Quotation 
List No. 1" and "Quotation List No. 2" — will be found in your bookkeeping equipment. The first of 
these is to be used until its use is discontinued and "Quotation List No. 2" is substituted for it, as 
directed in the memoranda. "Canned Goods" includes the several brands of canned fruits and 
vegetables, jams, jellies, etc., while the two grades of dried apples, pears, and peaches, are included 
under "Dried Fruits." In using the Quotation Lists, take extreme care to enter the proper prices 
and articles as required by the memoranda. 

Terms of Sale. Most of the sales in this business are made at "list terms," that is, on 60 
days credit at the prices given on the Quotation List, with a discount of 2 per cent off for Canned 
Goods and 1 per cent for Dried Fruit, provided the purchases are paid for in cash, or its equivalent, 
within 30 days. Other sales, however, are made at special terms and prices. The terms of sale 
should always be entered plainly in the blank spaces left for that purpose, at the top of the bill. To 
secure brevity inentering these, accountants use certain symbols and abbreviated expressions, to indi- 
cate different kinds of terms. Following is a list of them with their meanings as they are to be used 
in your present work: 

Net; amount of bill to be paid without further discount. 
n/30; net amount of bill to be paid within 30 days. 
2/30; two per cent off if paid within 30 days. 

1 /30 n/60; one per cent off if paid for in 30 days; amount of bill to be due in 60 days. 
Cash, C. O. D., or Net Cash; goods to be paid for in cash as soon as received, and 
without further discount. 

[Continued on page 38.] 



OPERATING BOOKS. 



37 



SALE.S JOURNAL. 



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Form of Bill. 



The Central Canning and Drying Company, 

MANUFACTURERS CF 

CHOICE DRIED AND CANNED GOODS, 



Jams, Jellies, Preserves, Etc. 



Sold to 



Hartley & Adams, 



Fremont, Ohio. 



Shipped per B - & °- Rv - 



Terms: Canned Goods 2/30 n/60 nr ,ed Frnite 1/30 n/60 MilUdale, 0, Au «- g > 1901. 





125 


Cs. Stan. Peaches 


1 


15 


143 


75 








75 


Bx. Dried Ap. (3750 lb.) 




06 


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40 


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1 


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1 


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1 


50 


60 


















548 


75 










Less 3 per cent 






16 


46 


532 


29 






Received Cash 






. 




100 








Balance 










432 


29 





















38 



CORPORATION AND VOUCHER ACCOUNTING. 



CASH BOOK. 



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Cash I^ess 5; five per cent off if goods are paid for in cash. 

Note.— It is now the general rule in business that cash terms are allowed, provided payment for a 
shipment cf goods is made within 3 J days of the billing date. 

Spot Cash; goods paid for at time of purchase, usually employed where goods are delivered 
at seller's warehouse, at the time of purchase. 

Abbreviations. Convenience and economy require that, in billing, certain special abbre- 
viations be used to indicate the articles sold. There are no definite rules as to what these abbrevia- 
tions shall be; each bookkeeper exercises his own taste and judgment. The symbol chosen should 
be definite, however, and so characteristic of the word abbreviated that the buyer will have no 
difficulty in knowing what article is meant. The abbreviations given in your Quotation List are 
such as would probably be used by a billing clerk, and you should use these or similar ones in your 
own billing. 

What to do When a Sale is Made. 

1. Referring to the quotation list, enter the purchase with the date, and the terms and the 
proper prices, on the bill, being careful to follow the directions on the cover of your Duplicate Bill 
Pad. On a sheet of loose paper, compute the amounts, (and discounts, if any are allowed at the 
time the bill is rendered), after which enter the extensions and amounts on the bill. Be especially 
careful to take the correct prices, as given on the Quotation Lists, and prove all computations before 
entering the amounts on the bill. In columnar bookkeeping, errors in billing if allowed to occur, 
will cause much annoyance, and extra work. 

If a payment is made, either whole or in part, at the time a purchase is made, credit the pay- 
ment at the bottom of the bill, as shown in the model form on page 37. 

2. When the bill is prepared, remove it by tearing along the perforated line, and deliver to the 
customer through the envelopes marked "Bills Rendered." Place the carbon copying sheet under 
the next white bill, copying surface downward, in order that it may be in position when another bill 
is to be made out. 

3. Enter the sale in the Sales Journal as shown in the model form on page 37, being careful, 
if the sale consists of both dried fruit and canned goods, to enter the proper amounts in these col- 
umns. If the goods are sold at regular list terms, it will be sufficient to write the word "list" in the 
terms column. 

Should a sale be paid for at the time the order is given, which sometimes occurs, it is neverthe- 
less entered on the Sales Journal and carried to the customer's account, the same as a time sale. In 
a manufacturing or wholesaling business, it is important to keep records of all sales, whether for 
cash or on account. 



OPERATING BOOKS. 



39 



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Care should be taken to enter in the Cash Book or Journal as the case may require, and at the 
time the Sales Journal entry is made, any payments that may have been made to apply on the 
purchase. 

The Cash Booh. 

The accompanying form illustrates the Cash Book to be kept in this business. Notice that there 
are three debit and three credit money columns, which are to be used as designated by the printed head- 
ings. The totals of the several special columns are posted to the respective accounts in the Ledger 
whenever it may be necessary. When a page of the Cash Book is filled, the several totals are for- 
warded to the next page. If desirable, the Cash Columns may be balanced at any time, and without 
footing up and posting the special columns. 

When the totals of the special columns are posted, the Ledger folio is entered in small figures 
just above (or below) the amounts, as shown in the form. 

Petty Expense Book. 

In conducting a business office, there are frequently small expenditures, which it is inconven- 
ient to keep account of in the General Cash Book, with a regular entry for each trifling expenditure. 
Instead of doing this, the minor office expenditures are provided for by a special fund known as a 
"Petty Expense Fund" which is set apart for the purpose, and which is in the personal charge of the 
bookkeeper or office clerk whose business it is to make the expenditures. These are recorded in a 
special book called a Petty Expense Book. When cash is set aside for petty expenses, the amount 
is entered on the debit side of this book, and credit entries are made for all expenditures as they oc- 
cur. An account with ''Petty Expense" is kept in the General Ledger, and at the time cash is re- 
served for petty expenses, an entry is made on the credit side ol the Cash Book, charging this account 
with the amount reserved. When the books are closed, any unexpended balance belonging to the 
Petty Expense Account would be listed as a resource. 

The accompanying form illustrates the method of recording the entries in the "Petty Expense 
Book" and entering and forwarding its balances. 

PETTY EXPENSE BOOK. 



July 



5 
10 
12 



IS 



Cash Rec'd per Treas. Ck. No. 1 
Office Stationery as per bill of Clarke & Sons 
Official fees for Incorporation 

Messenger service delivering: notices to incorporators 

Bal. 

Bal. down... - -. 



25 



25 



50 



5 25 

12 50 
1 75 

6 50 
25 



40 



CORPORATION AND VOUCHER ACCOUNTING. 



The Time Book. 

In establishments where there are a number of employees, accounts with these are kept in a 
book conveniently ruled for the purpose, and called a Time Book. In most business houses, em- 
ployes are paid each week, and the Time Book here shown illustrates the time and wages as made 
out for the first week for a working day of eight hours. The first column contains the numbers of 
the several employees, the next, the wages per day, and the succeeding columns, the hours worked 
each day according to the time-keeper's book, the total number of hours for the week, and the 
amount due. In some Time Books there is a column in which the employee writes his name as a 
means of receipting for the money paid him, but this practice is seldom followed. 













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Memoranda for July 20 {continued from fiag-e 3 1) 

Study the description and form of Journal given on pages 36 and 33, after which, prepare your 
opening entry as required by the following statement of the resources and liabilities of the late firm 
of Douglas, Fenton & Co. at the time the business was incorporated. See the opening entry for 
McCloud Tanning Co. page 23. 

The six personal accounts listed among the resources are to be opened in the Sales Ledger, as 
they represent customers to whom goods have been sold on account. The amount of these accounts 
is to be posted direct to the Sales Ledger Account in the General Ledger. The method of listing 
them in the opening entry is as follows: — 



Sales Ledger Account, 




2521 


SI 










S. H. Arthur & Co., 


#425.30 














Stuart & Hall, 


247.50 














C. H. Bell & Son, 


321.15 












John Maxwell, 


142.30 












Graham Grocery Co., 


456.80. 












Farnham Blair & Co., 


928.50 








I 





MEMORANDA FOR JULY 20. 41 



Statement of Resources and Liabilities of Douglas, Fenton <3 Co., 

July 20, 1901. 

Resources. 

Plant, machinery, tools, etc $75000.00 

Canned Goods, Unsold Stock 2590.75 

Tinning and Casings, C. G. Dep't. 248.1 5 

Miscellaneous C. G. Dep't 127.10 

Dried Fruits, Unsold Stock 526.20 

Packing and Casings Dr. F. Dep't 64.10 

Fuel (estimated) 175.00 

Bills Receivable, transferred 786.45 

Interest accrued on same 65.50 

Accounts Receivable as folloivs : 

S. H. Arthur & Co., Janesville, Wis 425.30 

Stuart & Hall, Aurora, 111 247.50 

C. H. Bell & Sons, Muncie, Ind 321.15 

John Maxwell, Clinton, la 142.30 

Graham Grocery Co., Hannibal, Mo 456.80 

Farnham, Blair & Co., Hillsdale, 928.50 

Liabilities. 

Bills Payable (assumed by company) 2146.50 

Interest accrued on same 1 78.25 

Accounts Payable as folloxvs : 

Chicago Tinning Co 1 78.40 

Braile & McKnight, Cincinnati, O.. : 329.70 

Ohio Lumber Co., Cleveland, 95-IO 

When your opening entry is prepared, submit it to your teacher for approval, after which, it 
should be posted to the several accounts in the General and Sales Ledgers. For convenience, these 
books are bound together under one cover. The General Ledger consists of the first part of the 
book, which is ruled for half-page accounts, and the Sales Ledger the remainder of the book, the 
Sales Ledger Index separating the two. 

Page each Ledger separately before opening any accounts, beginning with the first page follow- 
ing the index. 

Open accounts in your Installment Ledger with the several persons who have subscribed for 
stock, debiting them for the number and amount of their shares, as shown by the Stock Subscription 
Agreement. (See Installment Ledger page 14). Then make out Installment List No. 1. Rule up 
a sheet of blank paper for this purpose, following the form of Installment Book given on page 13. 
Keep this list in your Installment Ledger, and make the required entries on it, and on the Install- 
ment Ledger accounts, whenever any of the installments are paid. 

The following persons have paid their installments (No. 1) in cash: E. P. Moody, John A. 
Martin, and Student. 

Make the required entries on the Installment List, after which, make out and deliver through 
the "Installment Certificate" envelope, the necessary Installment Certificates and make the required 
entries in the Installment Ledger. Refer to your Minute Book and the memoranda for the datings. 

Study description and form of the Special Column Cash Book given on pages 38 and 39 after 
which credit Subscription with the installments paid by Messrs. Moody and Martin and yourself, as 
in the entry for Jan. 7 in the Cash Book on page 38. 

Read description of the Petty Expense Book on page 39. 



42 CORPORATION AND VOUCHER ACCOUNTING. 

Since you have been Secretary of the company it will be assumed that you have paid cash for 
incidentals out of your own personal funds, as follows: 

July 10 — Office stationery per bill of Clarke & Sons # 5.25 

" 1 2 — Official fees incident to incorporation 1 2.50 

" 12 — Paid messenger boy for delivering to stockholders 

special notices of called meetings 75 

Total $18.50 

To meet these and similar minor expenditures, the Treasurer of the company hands you a 
check for $25. 

Make the necessary entries in the Cash Book and Petty Expense Book. See entry for Jan. 7 
in Cash Book, page 39. 

Read carefully all instructions relating to the voucher system of accounting on pages 31 to 36, 
after which continue your work as given in the following Memoranda. 

Memoranda for July 27, 1901. 

Note.— To secure the proper maturity of notes and accounts, and to avoid too much repetition of 
siirilar transactions, the supposed business operations for one week will be given under one dating, viz: 
the last day of the week. This arrangement will allow the corporation business to extend over a longer 
period, and will also admit of a more reasonable disposal of the labor accounts, etc. At the end of the 
business for each week, the student will post all entries or totals, balance the Cash Book, and take a 
trial balance of the General Ledger. 

A. C. Tilford of Hillsdale, O., has delivered at the cannery 175 bu. of green peas at 30c. He 
presents buyer's tickets as evidence of the delivery. Make out a voucher for this purchase as 
follows: — Fill out the first voucher in your Voucher Book, following the form given on page 32. 
Also fill out the stub, entering the amount opposite Canned Goods, Raw Products. Then enter the 
voucher in the Voucher Payable Register, as shown in the entry for Voucher No. 1, on page 34. 
Assuming that the voucher has been paid, deliver it through the envelope marked "Vouchers Pay- 
able Delivered," and make entry on credit side of the Cash Book as in the entry for Jan. 8, page 39. 

Note.— Be careful in this part of your course to use vouchers in the "Voucher Book" and not those 
in "Voucher Check Book." 

Issue a voucher in favor of McNeil & Clarke* Cincinnati, for their bill of July 16, for the fol- 
lowing goods that have been duly received at the cannery. Terms, cash. 

15 Boxes "XXX" Tin Plates at #18.50 

12 " "Medium" Tin Plates at 15.25 

Enter on stub and in the Casing Column of the Canned Goods Account in Voucher Payable 
Register. See entry for Voucher No. 2, page 34. Make Cash Book entry as in previous voucher. 

Paid cash for postage stamps for office, #2. Enter in "Petty Expense Book." 

Geo. P. Morton hands you his check for payment of Installment No. r. Issue Installment 
Certificate and make entry in Installment Ledger, Installment List, and Cash Book as heretofore. 

The Acme Printing Co. of Cleveland, O., has delivered 5000 advertising circulars with their bill 
for same, dated July 20, #21.75. Issue and deliver voucher, charge "Gen. Expense" in Voucher 
Payable Register, and make proper Cash Book entries as heretofore. 

C. W. Wilson, Castleton, O., presents buyer's tickets for 185 crates blackberries at 40c, 
delivered at cannery. Issue and dispose of voucher and make entries as in the case of the peas 
bought of A. C. Tilford. 

S. H. Arthur & Co. remit N. Y. draft for #234.08 in payment of a bill of goods sold them on 
July 6 by Douglas, Fenton & Co., amounting to #246.40, on which they are entitled to a discount of 
5 per cent. Make necessary Cash Book entries in "Sales Ledger Credits," "Mdse. Dis. Debits" and 
"Cash Debits" columns. See entry in Cash Book, page 38 for Jan. 8. 

J. S. Miller pays Cash for Installment No. 1. Proceed as heretofore. 

T. J. Hart & Sons, Piqua, O., remit check for their note of Jan. 5 for #172.40 with accrued in- 
terest to date, #5.68. Credit "Bills Rec." and "Interest" in Cash Book as in entries for Jan. 9, page 38. 

J. M. Johnson, Hillsdale, O., presents Buyer's Tickets for 68 bu. peas at 35c. Make out 
Voucher and dispose of transaction as in previous cases. 



MEMORANDA FOR JULY 27. 43 



Read carefully all instructions under "Recording Sales of Merchandise," pages 36 to 39, after 
which dispose of the following sales, observing carefully all instructions as to preparing and copying 
bills, making entries in Sales Journal, etc. (See "Abbreviations," page 38.) 

A. Monroe & Co., Elkhart, Ind. — 

50 cases Perf. Blk.; 40 cases Pie Blk.; 25 cases Perf. Peas; 10 cases Straw. Jam. List terms. 
See Sales Journal entry for Jan. 8, page 37. 

Stuart & Hall, Aurora, 111. — 

25 Bx. Dia. Ap.; 15 Bx. Dia. Pears; 20 Cs. Perf. Cher.; 15 Cs. Cr. Ap. Jam. List terms. See 
entry for Jan. 4, page 37. 

Note.— Hereafter in all sales of dried fruit, assume boxes to weigh 50 lbs. each. 

O. C. Oliver & Co., Monmouth O. — 

75 Cs. Pie Blk.; 30 Cs. Rasp. Jam; 30 Cs. Straw. Jam; 40 Cs. Straw. Jel. List terms. 

Farnham, Blair & Co., Hillsdale, O., — 

100 Cs. Perf. Blk.; 25 Cs. each Straw., Rasp., and Cr. Ap. Jelly; 75 Bx. Dia. Ap. Spot Cash 
less 6 per cent. 

This is a sale to a local buyer who pays cash and receives a special discount of 6 per cent from 
our regular list prices. Such sales are rather unusual in wholesaling business; but since it is desir- 
able to keep an account of all sales, they are entered in the Sales Journal, the same as a sale on ac- 
count. Entries are made in the Cash Book as in the case of a payment on account. The buyer is 
charged for the goods, the same as if he had bought them on account and had then been credited for 
the cash payment with the discount added. See Sales Journal entry for Jan. 10, page 37, also 
BookCash entry for Jan. 8, page 38. 

Note— A question might be raised as to the necessity for making these several entries in the case 
of a cash sale, but it should be remembered that in a large wholesaling business, it is of much import- 
ance to keep complete records of every sale; the method here indicated is the one followed by most firms. 

C. W. Walker, of Arcade, O , presents buyer's tickets for 69 tons of sweet corn at $4. 50. Make 
out, pay, and deliver voucher, as heretofore. 

J. S. Miller has transferred his installment certificate to A. W. Nelson, of Monmouth, O., who is 
to assume Mr. Miller's Stock Subscription. See directions for transferring installment certificates 
pages 7 and 14, and proceed as there directed. 

The Graham Grocery Co., Hannibal, Mo., have accepted, under date of July 25, and returned 
our draft drawn on them at 30 days sight for balance due us. See entry for Jan. 6 on page 33. 

A. P. Harbinger & Sons, Cleveland, O., have rendered us a bill dated July 20 for spices bought 
for Canning Dept. amounting to $85.70, upon which we are entitled to a discount of 3 per cent. Make 
out and deliver voucher for the amount less discount. Itemize on face of voucher as follows : — 

For Bill of July 20 .$ 85.70 

Less 3 per cent 2.57 83.13 



Charge to "C. G. Miscellaneous Account," on stub of voucher and in V. P. R. See Cash Book 
entry for Jan. 10, page 39. 

A. T. Melville & Co., Indianapolis, order on our regular list terms as follows : — 
50 Cs. "Perf." Peaches, 75 Cs. Standard Corn, 40 Bx. Orchard Apples, 2000 lbs. 

The Brandon Co., Trenton, N. J., have delivered to us: 3 Davis Fruit Evaporators with equip- 
ment complete as per bill of July 22, $4265.90. We buy these machines at 30 days. Make out 
voucher and required entries in Voucher Payable Register, charging purchase to "Plant." As the 
voucher is not to be paid at once, allow it to remain in the Voucher Book until the expiration of the 
term of credit. See entry for voucher No. 6, page 34. 

The Company Directors have authorized Arthur Moore to pay his installment with cash S-500 
and his 30 day note at 6 per cent interest with approved security for balance. Issue the necessary 
Installment Certificate. See Journal entry for July 7, page 33. Enter the Cash item in the general 



44 CORPORATION AND VOUCHER ACCOUNTING. 

column of the Cash Book, checking off the item in the Journal. No explanation in the Cash Book 
is necessary, write "J." in the explanation column to show that the item was entered from the Journal. 
The Company's buyer, E. P. Moody, has purchased from various parties since the Company 
was incorporated, products for the Canned Goods Dept. amounting to $1428.50, and for the Dried 
Fruit Dept. $967.25. He presents foremen's receipts for the amounts of the several purchases and 
you are to issue a voucher, withoheck, to him for the full amount. Itemize in voucher as follows: 

For Purchases to date of Raw Prod, for Can. Dept 1428.50 

For Purchases to date of Raw Prod, for Dr. Fruit Dept 967.25 



239575 



Note.— In the canning business, fruits, vegetables and other required raw products, are usually 
bought by contract from the growers, who deliver them from time to time at the Cannery, receiving 
weigher's checks, which are presented at the office and paid. If the voucher system is not used, the 
proper accounts are charged in the Cash Book. In the present course, to avoid the issue of the large 
number of vouchers which would be necessary in accounting for these separate purchases of raw pro- 
ducts, it will be assumed that most of them are made by the buyer, E. P. Moody, who personally pays 
for them, receiving at the end of each week a voucher with payment for the entire amount purchased for 
that week as shown by the foremen's receipts. 

Henry T. Bell pays cash for first installment of his stock. 
The B. & O. Ry. Co. freight bills to date are as follows: 

27 Bx. Tin, Mc N. & Co., Cin $ 3.75 

3 Bx. Spices, A. P. H. &Co., Cleveland 6.75 

Carload Machinery, The Brandon Co., Trenton, N. J 67.50 

Issue voucher with payment, charging the items respectively to "C. G. Casing," "C. G. Miscel," 
and "Plant" accounts. 

See entries for Voucher No. 9, page 34. 

Note.— Always make out the voucher, with the proper entries on the stub, before making the record 
in the V. P. R. 

L. M. Barnes, hands in Pay Roll for the week as follows : — 

Canned Goods Dept., $1826.15; Dried Fruit Dept., $623.95. 

Issue voucher with payment in favor of Mr. Barnes, charging the amounts to the respective la- 
bor accounts. See entry for voucher No. 12, page 34. 

Note.— In manufacturing concerns, the accounts with operatives, are kept by the time-keeper who 
usually makes his report, weekly, to the Superintendent in time for the hands to be paid off on Saturday 
evening. The pay roll, after being approved by the Superintendent, is passed to the proper office 
clerks who place in separate envelopes the exact amounts of money due the several employees. Some- 
times the employees are required to sign the pay roll as a receipt, but this is not usual, especially in 
large establishments. Some concerns pay their employees on Monday for the work done the previous 
week. 

The form on page 40 illustrates a convenient method for keeping a time book, from which the 
pay roll is made out. 

Salaries have been paid for the week as follows: L. M. Barnes, $50; Student, $40; J. M. Davis, 
$30; E. P. Moody, $40; James Douglas, $40. Charge Geri. Expense in Cash Book, as in the entry 
for Jan. 9, on the Credit side of the Cash Book, page 39. 

Note.— Where there are several persons who receive their salaries regularly each week or month, it 
is unnecessary to keep individual accounts with these persons, since the checks when endorsed, con- 
stitute a sufficient record. If, however, salary payments are made irregularly, it is better to keep the 
individual accounts. 

A meeting of the Board of Directors was held on this date. Present a full board. 

Motion by Director Douglas that a further installment of 50 per cent, of the subscribed stock be 
called for, the same to be due and payable on or before Aug. 3, 1901. Carried by unanimous vote. 

Motion by Director Moore that J. A. Ryan be employed to act as night watchman, at the fac- 
tory at a salary of $15 per week. Carried. 



MEMORANDA FOR JULY 27. 45 



The chairman addressed the board on the importance of equipping the Cannery with improved 
machinery. Decided on motion of Director Morton that Supt. Barnes be instructed to make an im- 
mediate trip to Cleveland and Chicago for the purpose of investigating late canning machinery, 
prices, etc., and the feasibility of disposing of certain machinery that it is expected to replace. It 
was also decided that the foreman of the Cannery, C. W. Peters, is to act as superintendent during the 
absence of Mr. Barnes. The meeting then adjourned until August 3rd, at which time Mr. Barnes is 
expected to make his report. 

Record the proceedings of this meeting in the Minute Book, and make out Installment List No. 2. 

You will now post the books to date, observing with great care the following directions: — 

1. Find the correct footings of the following special columns, recording them and making the 
proper rulings, as shown in the model forms as follows: — 

(a) "Sales Ledger Credits" Column in Journal, page 33. 

(b) "Sales Ledger Credits," "Mdse. Dis.," (Debits and Credits,) and "Voucher Pay. Debits" 
Columns in Cash Book, pages 38 and 39. 

(c) The three columns of the Sales Journal, page 37. 

Note. — See that the totals of the "Canned Goods" and "Dried Fruit" columns together equal the 
total of the "Sales Ledger Debits" column. 

(d) All the money columns of the V. P. R., pages 34 and 35. 

Note.— Prove the V. P. R., by ascertaining that the total of the "V. Pay. Cr." column equals the 
sum of the totals of the other columns. 

2. Post the Journal. Be sure that all accounts with customers are opened in the Sales Ledger, 
and that every account is properly indexed when it is opened. Post the total of the "Sales Ledger 
Credits" column to the credit side of the Sales Ledger Account in the General Ledger. 

3. Post the Cash Book, omitting such items as were entered from the Journal, also, the credit 
items that record the payment of vouchers. Post the totals of the special columns of the Cash 
Book as follows: 

(a) The "Sales Ledger Credits" column to the credit side of the Sales Ledger Account. 

(b) The "Mdse. Dis." columns to the debit or credit side of the Mdse. Discount Account, as 
indicated by the headings. 

(c) The "Voucher Pay. Debits" column to the debit side of the Vouchers Payable Account. 

Note.— In posting these special columns, you will need to observe great care that you do not enter 
them on the wrong side of the Ledger. 

4. Post the Sales Journal. The amount of each sale is to be entered on the debit side of the 
customer's account in the Sales Ledger, and in making this entry alv.'ays enter tlfe terms of the sale 
in the explanation column of the Ledger. This will save the trouble of looking back through the 
Sales Journal when customers send remittances in payment of their purchases. 

Post the total of the "Sales Ledger Debits" column to the debit side of the Sales Ledger Ac- 
count, and the "Canned Goods" and "Dried Fruit" credit columns to the credit side of the respective 
accounts in the General Ledger. 

5. Post the Voucher Payable Register, as follows: Post the total of the "V. Pay. Cr." column 
to the credit side of the Voucher's Payable Account, and the totals of all the other columns to the 
debit side of the several accounts in the General Ledger. 

6. The correctness of the General Ledger is now to be proved by means of a Trial Balance, 
with the method of preparing which, the student is assumed to be familiar. 

Following is a list of the accounts that should appear on your Trial Balance for July 24. The 
several accounts of the Sales Ledger, of course, do not appear, as these are represented by the Sales 
Ledger Account in the General Ledger. 

The balance of Cash should be entered on the debit side of the Trial Balance, but as errors in 
the Cash Book are likely to be found, it is well not to close and balance the Cash Book until after 
the correctness of the books has been ascertained. 



46 CORPORATION AND VOUCHER ACCOUNTING. 

Cash. 

"Capital Stock. 
Subscription. 
Franchise. 
Plant. 
Canned Goods. 

" Casing. 
" " Miscellaneous. 

Labor. • 

Raw Product. 
Dried Fruit. 

'■ " Raw Product. 

" Casing. 

Labor. 
Fuel. 

General Expense. 
Petty 

Mdse. Disc. 
Bills Receivable. 

" Payable. 
Interest. 
Sales Ledger. 
Vouchers Payable. 
Chi. Tinning Co. 
Braile & McKnight. 
Ohio Lumber Co. 

7. When your Trial Balance has been submitted to your teacher and approved, balance and 
close the Cash Book, after which continue with the work as follows: 

Memoranda for Aug. 3. 

A warehouse for storage of goods, etc., has been leased from B. T. Sloan, at a rental of $75 per 
month beginning Aug. 1, and one month's rent has been paid in advance. Charge to Gen. Expense 
in Cash Book. 

F. H. Lanning of Avon, O., has delivered at the Cannery, berries from his fruit farm as per 
buyer's receipts, filed this day, $614 20. 

A. B. Holloway of Columbus, O., sends a "rush" order for 100 Cases "Perf." Blk. at list terms. 
He requests us to send by U. S. Express and prepay charges. Include the express charge, $28.60, 
in the bill and charge the item to "Canned Goods" in the Cash Book. 

We have sold R. C. Noble & Co., Sharon, Ind., at 30 days, 25 Cs. each of our Straw., Rasp., 
and Cr. Ap. Jel., and 50 Bx. Dia. Peach. This is a trial order and the buyers are to be allowed 
special discounts from list prices of 6 per cent on the Strawberry and Raspberry, 5 per cent on the 
Crab Apple Jelly, and 2^ per cent on the Peaches. 

Indicate the rate of discount allowed on each item, when making out the bill, and deduct before 
entering the amount. 

Note— As these are not time discounts, but special rebates from prices, and given to secure trade, 
they are not carried to the Merchandise Discount Account. 

A. B. Newell & Sons, Hillsdale, O., present their bill of July 22, for services in placing machin- 
ery and making various repairs in the plant, $72.10. Issue Voucher with payment and charge to 
Gen. Expense. 

Withdraw $20 in cash, and charge to Petty Expense Fund. 

M. F. Lee, Hillsdale, O., presents buyer's checks for 23 tons Green Peas at $16.50 and 17^ 
tons Green Beans at $12.50. 

Farnham, Blair & Co. hand us $500 on account. 

We have received from Chicago Sugar Refining Co., billed at 2/30, n/60, a carload of "Extra 
C" sugar, 100 Bbl. (300 lb. ea.) at 5^c, 



MEMORANDA FOR AUG. 3. 47 



Voucher made out but not piid. Charge to "Canned Goods, Miscel." 

The Ohio Lumber Co., Cleveland, O., present bill of Aug. I, for lumber purchased for casings 
(boxes for packing goods) $379.15. This lumber is billed at 30 days. $165.40 of the amount is for 
the Canned Goods Dcpt. and the remainder for the Dr. Fruit Dept. 

C. A. Gregory & Co., Akron, O., order at regular list terms the following goods: 60 Cs. Perf. 
Pears; 75 Cs. Stan. Cher.; 25 Cs. Perf. Ap.; 75 Cs. B. Bk. Beans, and 18 Cs. Stan. Ap. B. 

Pd. Hillsdale Loan & Trust Co. rent tp Sept. 1, $375. (Gen. Expense — no voucher.) 

The Student, Geo. P. Morton, A. W. Nelson, and E. P. Moody, pay cash due for Installment 
No. 2. 

C. H. Bell & Co., Muncie, Ind., order at list prices, a car load of Dia. Peach., 800 boxes. They 
send their check for $1500, and are to be allowed 60 days in which to settle for the balance of the 
invoice Charge them in Sales Journal for full amount of the bill, giving them credit in the Cash 
Book for the payment. 

The Hocking Valley Coal Co , Hillsdale, O., present their bill of July 29 for a car load of coal, 
45000 lbs. at $1.70 per ton, Make out, pay, and enter voucher, charging to Fuel Account. 

O. C. Oliver & Co. remit check for their purchase of July 27, less 2 per cent. 

A. Monroe & Co., Kokomo, Ind., order 12CS. each of Blk., Straw, and Cr. Ap. Jam; 25 Cs. 
Perf. Peas, and 40 Bx. Dia. Ap. We have offered them 2\ per cent, off for "spot cash," and their 
order is accompanied by a check for a sum sufficient to entitle them to a credit of $100. 

A. T. Melville & Co. ask for a Memorandum of Credit for a shortage of 3 Bxs. Orch. Ap. in 
our recent shipment to them, reporting also that six of the cases of peaches sent were "Standard" 
instead of "Perfection", as ordered; these, however, they will retain if credited with the difference in 
cost. Journal entry; debit "Canned Goods" and "Dried Fruits" for the discrepancies and credit 
Sales Ledger Account, making full explanation. See Journal entry for Jan. 8, page 33. 

The Eagle Boiler Co., Cleveland, O., present their bill for boiler and trimmings, for use in drier, 
$485.60, also for setting up same and making connections, etc., $47.25. Issue and pay voucher and 
charge to "Plant." 

Note.— Hereafter, no special directions will be given as to entries, unless in the case of exceptional 
or difficult transactions. 

H. T. Bell, Arthur Moore, and J. A. Martin, have paid cash for the amounts due from them on 
Installment No. 2. 

Our traveling salesman, John A. Martin, sends in his expense bill for the week ending July 
27, a mounting to $47.50. He requests that we remit to him a check covering the amount of this 
bill, also $25 on account of salary. His request is complied with. 

Note —Commercial travelers usually send in weekly bills for their exoenses, which amounts are 
remitted to them direct, but on account of their absence from the place of business, their salaries are 
not usually paid regularly each week. For this reason it is convenient to keep personal accounts with 
them, crediting them periodically with salary due and charging them with all payments on account of 
salary. Their expense bills are paid and charged to 'General Expense," voucher-; bring made out as 
in the case of other bills. In the present case, charge Mr. Martin in the Cash Book with the $25 sent 
him on account of salary, and remit voucher with payment for the expense bill. In business, a separate 
check would be sent for each amount. 

Arthur Moore, having in contemplation the sale of a portion of his corporation interests, sur- 
renders his two installment certificates, Nos. 7 and 14, and requests you to issue in their stead two 
other certificates, one for 100 and the other for 150 shares. Take Mr. Moore's certificates from the 
"Installment Certificate" envelope, cancel them, and attach to their original stubs, and issue him two 
new certificates for the amounts desired, each one covering installments I and 2, or 75 per cent of the 
face. Credit him in the Installment Ledger for the amount still unpaid on the two certificates can- 
celled, and charge him with the new ones issued. 

Read "Transferring Stock," page 7, and see R.C. Venable's Account in Installment Ledger, 
page 14. 

Charles Baker, traveling salesman, reports traveling expenses for the week ending July 27, 
$61.20, and A. VV. Long reports expenses amounting to $41.15. Issue and pay the necessary 
vouchers and make entries as heretofore. 

Stuart & Hall remit their check in payment of their purchase of July 27, less the specified dis- 
count allowed on the two classes of goods covered by their bill. 
4 



48 CORPORATION AND VOUCHER ACCOUNTING. 

The clerk of the Board of Public Works, Mr. S. A. Balcom, presents a bill for our water rates 
for July amounting to $7125. Voucher with payment, charge to "Gen. Expense." 

Sold A. T. Melville & Co. at list terms, 75 Cs. ea. Straw., Rasp. Blk. and Cr. Ap. Jam, and 100 
Bx. Orchard Peaches. 

Arthur Moore wishes to transfer to H. T. Bell Installment Certificate No. 16 for 100 shares. 
Take the certificate from the Installment Certificate envelope, fill out the form on the back, and 
present it to your teacher who will sign lor Mr. Moore. ^ Cancel the certificate and attach to the 
original stub, then issue a certificate to the transferee for the required number of shares. Make 
entries in the Installment Ledger as instructed on page 7. 

E. P. Moody presents foremen's receipts for $2462.25 for raw products purchased, $1756.40 of 
which is for the Cannery and the lemainder for the Drier. 

The B. & O. Ry. presents bills for freight as follows: — 

July 29. 100 bbls. Sugar, C. S. Ref. Co., 31250 lbs. at I2^c per cwt. 

" 31, 1 Car. Lumber 0. L. Co., Cleveland $21.50 

Aug. 1, 1 steam boiler, etc., Eagle Boiler Co., Cleveland 34-20 

Make out and pay voucher. Charge the items of the bill to the proper accounts as indicated by 
the several shipments. Pro rate the item of freight on lumber between the drying and canning 
departments, on the basis of charges against these departments when the lumber bill was paid. 

Note.— In pro rating charges of this kind, exact mathematical accuracy is not required. Drop the 
cents and find the percentages as follows:— 

$165-f-$379=43.5-|-or 44 per cent. 

$21 50x44 per cent=$9.46. Freight charge to Canned Goods Casing Dept. 

$21.50— $9.46=$12.04. Freight charge to Dr. Ft. Casing Dept. 

The pay roll for the week amounts to $1915.10 for the Canning Dept. and $681.50 for the 
Drier. Issue a voucher to the acting superintendent, C. W. Peters, charging the amounts to the 
respective labor accounts. 

Pay cash for salaries for company officers, same amounts as for week ending July 27. 

Post the books to date following previous instructions. Close Cash Book and prepare a Trial 
Balance of the Ledger, which you will submit to your teacher for approval. 

Proceedings of a Called Meeting of the Board of Directors to Hear Report ofSupt. Barnes 
Regarding the Purchase of New Machinery, Etc. 

Mr. Barnes made an extended verbal report, describing the various cannery plants he had 
visited and making recommendations as to the changes in the present plant and machinery which 
seemed to him desirable. The plans proposed would involve an expenditure of from $60,000 to 
$75,000, and enable the capacity of the cannery to be doubled. 

Lengthy discussion of Mr. Barnes' report. 

Committee consisting of directors Martin, Douglas, and Moore, was appointed to co-operate 
with Mr. Barnes, and take immediate steps to enlarge the plant and provide it with improved 
machinery in accordance with his suggestions. 

A call was made for payment of the third and final Installment of Subscribed Stock, the same 
to be due on or before Aug. 17. 

The Secretery was instructed to investigate the present condition of the Company's insurance 
policies, and to arrange for increasing the same. 

The Secretary was also requested to prepare and submit at the next meeting of the Board, a 
code of By-laws for the government of the Corporation. 

Meeting adjourned to Aug. 17, 1901, at 7:30 p. m. 

Note.— The student should write up these minutes in the Minute Book, exercising all the care that 
he would use were he holding: the responsible position of Secretary in a real corporation. It is only by 
actual and faithful practice that one can learn to do work of this kind. He should also try his hand at 
preparing a set of By-laws, such as he v ould consider desirable in the case of a corporation of the 
nature of the Central Canning and Dning Co. These By-laws might cover such matters as, 1. The 
time of holding the annual ufeeting of Stockholders. 2 The time of Directors' regular meetings. The 
general duties of the officers. 4. Regulations governing the expenditure of the Company's funds, 
the auditing of the accounts, etc. 



MEMORANDA FOR AUG. 10 49 



Memoranda for Aug. 10. 

D. S. Milton & Sons renew their note of May 12, fav. D. F. & Co., for $487.50 with accrued 
interest at 8 per cent to date, giving us a new note at 60 days for whole amount due. 

Note. — Find the time by counting the days from one date to the other. 

The foreman of the Cannery hands in a charge ticket, showing that 75 bu. of Peaches costing 

85c per bu. and which were purchased for the Cannery, have been transfered to the Drier. 

Note.— In a manufacturing business transfers are often made from one department to another, and 
of course, must be entered on the books wien accounts are kept with the separate departments. The 
usual method is for the foreman of the department making the transfer, or his clerk, to make out a 
" Charge Ticket" or transfer bill in which the goods are described and their value stated. To prevent 
mistake, the charge ticket should be " OK-ed " or otherwise countersigned by the receiving foreman or 
clerk before being handed to the bookkeeper. The department to which the goods are transferred is 
debited, and the department making the transfer is credited. See entry for June 9, page 33. 

Marvin & Wright, Cincinnati, O., have ordered for immediate shipment at list terms : 100 

Cs. Stand. Tomat; 75 Cs. Pie Ap.; and 200 Cs. Stand. Cher. We find that we lack 75 cases of having 

enough Standard Cherries in stock to fill this order. We have, therefore, purchased of the Eagle 

Canning Co., of Marion, O., on account, 75 cases of cherries of same grade at $1.05 per case. 

This is a transaction for which no provision has been made in the Voucher Payable Register 
and we therefore make a Journal entry. See entry for Jan. IO, page 33. 

C. H. Webster & Son of Hocking, O., have delivered three cars of coal, 21*4, 22, and 233^ tons, 
at $1.25 per ton. Billed Aug. 5, at 30 days. 

We have sold to Farnham, Blair & Co. our entire stock of Canned Tomatoes, 1250 cases "Per- 
fection" at 60c and 985 cases "Standard" at 40c net. They hand their check for $500 in part pay- 
ment and their 60 day acceptance for balance. See entry for Jan. 1 1, page 33. 

Pay Carter & Hall's bill for stationery and minor supplies out of Petty Expense Fund, $12.25. 

The Daily Journal Co., Hillsdale, O., present their bill of Aug. 1, for printing letter heads, etc., 
and for ruling and binding a set of office books, $124.15- Issue Voucher with payment. Charge 
this and any future expenditures for similar purposes to General Expense. 

The firm of R. C. Noble & Co., Sharon, Ind., has made an assignment and the receiver has 
arranged to settle with creditors at 75 per cent. We accept the arrangement and receive a check 
for the amount due us on this basis, and close the account. See entry for Jan. 14, page 33. 

A. F. Scott, Hillsdale, O., presents buyer's checks for 17 tons Tomatoes from his farm that have 
been delivered at cannery; price, $6.00 per ton. Proceed as heretofore. 

The First National Bank presents for collection, Douglas, Fenton & Co.'s acceptance of June 
11, 1901, (assumed by the new company) in favor of the Ohio Manufacturing Co. of Cleveland, for 
$621.50. We hand the bank our check and take up the acceptance. 

We have purchased of Venable, Davis & Brown, wholesale grocers of Pittsburg, Pa., supplies 
for Canning Dept. (Miscellaneous) amountingto$258. 25. The goods are billed Aug. 2, at 5/30 n/60. 

Stuart & Hall, Aurora, 111., have placed an order at list terms for 40 Cs. Pie Peach., 75 Cs. Perf. 
Cher., 50 Cs. Perf. Corn, and 100 Bx. Orch. Peach. 

We have remitted a check to Braile & McKnight for their bill of July I 1 for $329.70 (rendered 

to Douglas, Fenton & Co. and assumed by the new Company) less allowed discount of 5 per cent. 

Note.— As this is an old account, a voucher would not be used.' Enter on the credit side of the 
Cash Book, also in Mdse. Uis. Cr. column. Debit the firm with the sum of the remittance and discount 
and close and rule up the account. 

J. H. Rankin, Beulah, O., has delivered for the Drier 175 Bu. Silver White Peaches at the con- 
tract price, 75c per bu.; also 85 bu. choice Crawfords for the Cannery at $1.15. Voucher with 
payment. 

We have sold to M. C. Anderson for Cash, certain refuse products, as per bills presented by 
the foremen. Those from Cannery amount to $74.20, and those from the Drier to $50.55. As this 
is not an ordinary sale of our manufactured products, an account is not opened with Mr. Anderson. 
Merely credit "Canned Goods" and "Dried Fruits" with the proper amounts in the Cash Book. 

Geo. P.Morton pays Installment No. 3 with cash in full, and presents his Installment Certificates 
with a request for the issue of his stock. Proceed as instructed on page 6. 

J. M. Rice & Co., Louisville, Ky., buy a trial order of 1 25 Cs. Stan. Peach., 75 boxes Dia. Apples, 
and 40 Cs. ea. of Straw., Blk., and Rasp. Jam. The goods are billed at 30 days net, and charged at 
3 per cent less than list prices. 



50 CORPORATION AND VOUCHER ACCOUNTING. 

The Directors have allowed E. P. Moody to pay Installment No. 3 with his demand note with 
approved security, and bearing interest at 6 per cent. Mr. Moody presents the note, and his stock 
is to be issued at once. 

C. A. Gregory & Co. report a shortage of 2 Cs. Bk. Beans and 1 Cs. Pears in our shipment of 
the 3rd, verifying their statement with railway freight bills. We send them Memo, of Credit for the 
amount. 

The Brandon Co., Trenton, N. J., offer us a special discount of 3 per cent from the face of their 
bill, provided we will make immediate settlement in Cash. We send Voucher with check less 
discount. 

John Maxwell, Clinton, la., remits cash less 4 per cent discount to balance account. 

Additional insurance policies covering property belonging to the company, have been taken out 
in various companies, the combined premiums on which amount to $78.20. Paid in cash. 

A portion of the Cannery floor gave way, and the accident resulted in breakage and other 
damage to stock amounting to $75.40. Cash was paid for extra labor in clearing away the wreck- 
age, packing, etc., $1 5.60. Charge to Loss and Gain. Journal entry. 

The Chicago Tinning Co. send bill of Aug. 6 for supplies for the Cannery tin shop, amounting 
to $42.70. Terms, 30 days less 5 per cent. 

The Great Northern Hotel Co. of Chicago, have purchased at list terms 20 cases each of our 
entire line of Jellies. 

A. T. Melville & Co. remit cash to balance account less allowed discounts and Memo, of 
Credit sent them Aug. 3. Deduct shortages allowed on bill of July 27, before computing the dis- 
count. 

The foreman of the Drier hands in charge tickets for raw products transferred to Cannery as 
follows: 45 bu. Peaches @ 65c, 25 bu. Apples ©45c. 

The Hillsdale Hardware Co. present bill of Aug. 9 for 25 Kegs Nails @ $2.55 for Cannery 
Casing department. Voucher with payment. 

Pay the third installment on your own stock in cash. Issue installment certificate and close up 

your Installment Ledger Account, after which issue your stock in three certificates of 60, 40, and 25 

shares, respectively, properly crediting your account in the Stockholders' Ledger for each certificate 

issued. 

Note. — As Secretary you have aright to issue your own Stock Certificates as you would those of 
any other stockholder, provided that the stock has been paid in full and the certificates are duly counter- 
signed by the president. 

S. H. Bannon & Co. of Syracuse, O , order at list terms and prices 1 50 Cs. Perf. Tomat, this 
year's crop. We are short 50 cases on this order and have bought the required quantity from the 
Eagle Canning Co. on account at 70c net. 

C. H. Bell & Co. report six boxes of the peaches sold them on Aug. 3, as being damaged and 
unfit for sale, and ask for a memoranda of credit for invoice cost. We comply with their request. 

The B. & O. Ry presents Freight bill for week ending Aug. 10, as follows: 3 Cars Coal C. H. 
W. & Co., Hocking, O., $24.75; Venable, Davis & Brown, Pittsburg, Pa., $34.90; Chicago Tinning 
Co. $6.25, Voucher with payment. 

Pro rate this bill among the accounts involved as shown by the Voucher Record. 

Supt. Barnes presents pay roll for the week as follows: Canning Dept. $2,025.60. Drier 
$714.75. Proceed as heretofore. 

Pay and enter up the weekly salaries for the same amounts as last week. 

Our traveling salesmen report expense bills for week ending Aug. 3, as follows: A. W. Long, 
$47.20; Chas. Baker, $52.80; J. A. Martin, 38.75. 

We have paid Mrs. A. \V. Long $50 on account of her husband's salary, and we have, on re- 
quest, remitted J. A. Martin $75 on his salary account. 

All amounts due on Installment No. 3 have been paid in cash. Issue the required stock certifi- 
cates. Close the several accounts in the Installment Ledger, and open the required accounts in the 
Stockholder's Ledger. 

Post the books to date and take a Trial Balance of the Ledger. 

Note.— Open the account with the Eagle Canning Co. in the General Ledger. 

Prepare a schedule of the balances of the several accounts in the Sales Ledger, in order to 
see if their total agrees with the balance of your Sales Ledger Account. Submit these to your 
teacher for approval before continuing your work. 



MEMORANDA FOR AUG 17. 51 



Memoranda for Aug. 17. 

A. S. Holloway, Columbus, 0., orders at list terms, I 50 cases Standard Peaches. 

The Buckeye Manufacturing Co., of Cincinnati, have delivered anJ set up new machinery in 
the Cannery, as per bills rendered, Aug. 15, amounting to Si 5.58645. These bills have been duly 
approved by the proper corporation officials and filed. We issue voucher with N. Y. Draft in pay- 
ment. We pay $2.50 exchange on this draft which is charged to Gen. Expense in the Cash Book. 

We have been awarded the contract for supplying the cinned goods and dried fruits required 
by the Asylum for the Insane at Kalamazoo, Mich. We are to deliver these goods at the Asylum 
storeroom at Kalamazoo at our list prices. In accord nice with these terms, we have shipped per 
their order of Aug. r6, 50 cases each, of our Perfection Peaches, Peirs, Blackberries, Cherries, and 
Apples; 100 cases each of Boston Bk. Beans, '* Perfection" Corn, and Perfection Peas, prepaying the 
freight charges in cash, amounting to $65.45. Charge this and other similar freight bills to the 
Canned Goods Account. 

We have received from A. T. Casterlin of Benton Harbor, Mich ,150 bu. Peaches @ $1.25 for 
canning and 90 bu. Peaches @ 85 cents for Drier, as per his bill of Aug. 12, we remit voucher with 
Chicago dft. for payment. 

We have sold to the Eagle Canning Co., on account, 75 cases Perfection Green Beans at 85 
cents net. 

Note.— As our account with the Eagle Canning Co. is in the General Ledger, the entry of this sale 
should be made in the Journal, and not in the Sales Journal, since the latter book is exclusively for 
entries that are to be posted to the Sales Ledger. 

S. H. Arthur & Co. settle their account to date with their note at 60 days. 

Pd. Cash from Petty Expense fund for electric light fixtures, $2.50; a dusting brush, 50 cents; a 
broom, 35 cents; and a floor sprinkler, 40 cents. 

We have handed the First National Bank our check to pay Douglas, Fenton & Co.'s note of 
May 19 (assumed by the company) in favor of Seymour & Co., Chicago, for $649.20 with 90 days 
interest at 7 per cent. 

Remitted Chas. Baker on account of salary, $125. 

Sell 25 shares of ycur C. C. & D. Co. stock to M. F. Coe of Newbury, Ind. 

Note. — As this is a transaction concerning yourself personally, no entry in the Operating Books 
is required. Transfer the stock to Mr. Coe, as instructed on page 7. 

A called meeting of the stockholders was held on this date to consider the matter of purchasing 
from the owner, J. S. Henderson, the site and buildings at present occupied by the company. All 
stockholders were present except Mr. Martin and Mr. Nelson. The Secretary, at the request of the 
President, read a communication from Mr. Henderson in which he offered to give a warranty deed to 
the property, free of all taxes and other incumbrances, for the sum of $50,000 in Cash. Mr. 
Fenton offered a resolution in favor of the proposed purchase and addressed the meeting in favor of 
accepting Mr. Henderson's proposition. 

Several stockholders spoke on the question, some favoring and some opposing the proposed in- 
vestment. Mr. Douglas moved that the vote be by ballot, and that the result be spread upon the 
minutes. The stockholders cast votes as per shares held by them, as follows: — 

For the purchase, Messrs. Fenton, Hanlon, Barnes, Student, and Morton. 

Against the purchase, the remainder of the stockholders present. Mr. Fenton held 
a proxy from Mr. Martin and voted his shares in favor of the resolution. Mr. Doug- 
las held Mr. Nelson's proxy and voted his shares against the purchase. After the matter 
of the Henderson purchase had been disposed of, it was moved by Mr. Douglas that 
the reserved Treasury Stock, provided for by the Articles of Incorporation, be placed on the 
market, the same to be held open for sale under such regulations as may be made by the Board of 
Directors; provided, that none of this stock be sold at less than 10 per cent below its par value. 
After some discussion this motion was carried unanimously. No further business was transacted at 
the stockholder's meeting, but upon its adjournment, a meeting of the Board of Directors was at 
once held, a full board being present. Director Moore off .red a resolution to the effect that the 
Treasury Stock should be offered for sale to the public under the following conditions: — 

First, that a cash payment of not less than 25 per cent be required on all stock sold, with 



52 



CORPORATION AND VOUCHER ACCOUNTING. 



secured notes or other securities approved by the President and Treasurer of the Company for the 
balance, said notes to bear 6 per cent interest. 

Second, that for the present, stock which is to be paid for in full in cash be offered at 5 percent 
below par. 

The resolution was carried without dissent. 

On motion, the Secretary was instructed to close the books and prepare a financial statement, 
exhibiting the state of the business at the close of the week ending Aug. 17, with a view to ascer- 
taining if the results of the first month's business would justify the declaring of a dividend. Meeting 
then adjourned. 

Write up the minutes for both meetings, giving a schedule of the votes cast by the stockholders 
at the stockholders' meeting, and the majority in favor of the purchase of the Henderson property. 

Prepare for booking sales of Treasury Stock by making the Journal entry as instructed on page 22 



VOUCHER CHECK. 



No. 



E. 176 



Amount $451.39 
If this voucher does not agree with your books, return WITHOUT ALTERATION and state difference. 



T. M. SINCLAIR «S» CO. Ltd. 


Pay +0 the order of H. S. Potter & Cc 
128 Dearborn St., Chicago 


»•, 




Cedar Rapids, Iowa. 

1907 


Four Hundred Fifty-one -ffi B DOLLARS. 


May 


7 


Mdse per Invoice of April 28. 30d 


475 15 








Less 5 per cent 


23 


76 


451 


39 

















































































Examined: 



R. Sinclair, 



Secretary. 



Approved : C. P. Carter, 



Treasurer. 



451.39 



Date Chicago, May 28, 1 9 QJ_ 

Received from T. M. SINCLAIR & CO, LTD., Cedar Rapids, Iowa, 
Four Hundred Fifty-one ftfc DOLLARS, 



being in payment of above account. 



H. S. Potter & Co., 



Per J. N. P. 



Payee. 



Special Notice— Receipt only by those having authority, and in ink. Paying bank will not accept 
unless conditions are complied with. 

PAYEE. SHOULD ALSO ENDORSE. 



MEMORANDA FOR AUG. 17. S3 



Form for Endorsement on Back of Voucher Check. 

M E 176 Endorsement should appear below. 

T. M. SINCLAIR & CO. Ltd., 



Payable to. 



Cedar Rapids, Iowa. 



H. S. Potter & Co., 



H. S. Potter & Co. 

Per J. N. P. 



128 Dearborn St., Chicago. 



or order. 



The Commercial Exchange Bank of New York 
will pay the amount of this Voucher when properly 
signed and endorsed. 

Voucher ChecK. Many large concerns make their payments by means of a combination 
check and voucher, which is known as a " Voucher Check." It consists of an ordinary voucher on 
the back of which is an order to a designated bank, authorizing the payment of the voucher to the 
payee or his order, when properly countersigned by the firm issuing it and receipted by the firm to 
whom it is payable. 

The payee is required to endorse the check when he receives payment, after which the instru- 
ment is returned by the bank to the drawer, as in the case of an ordinary check. 

The use of the voucher check saves the making out of ordinary checks, relieves the payee of the 
necessity of returning the voucher, and saves the trouble of subsquently attaching together the 
voucher and check, which is often done when these are issued as separate papers. 

The accompanying form illustrates the voucher check as it is used by one of the greatest manu- 
facturing concerns in the West. 

Hereafter, you are to use voucher checks for all payments requiring the issue of vouchers. A 
book of voucher checks will be found in your equipment. In issuing thiin, fill out all forms com- 
pletely, with the exception of the receipt which is filled out by the person receiving the voucher 
check, and before he presents it at the bank for payment. 

Adams & Robinson, the Company's attorneys, present their bill dated A'ig. i, for their services 
in connection with the organization of the Company, $25. Issue voucher cluck. 

O. C. Oliver & Co. order at list terms, 75 cases Perfection Tomitoes, 100 cases Standard Peas, 
and 45 boxes Diamond Peaches. 

The purchase of the J. S. Henderson property has been duly consummited, and the company's 
certified check for the purchase price, $50,000, has been handed to the former owner. Charge the 
amount to Plant in Cash Book. 

We have taken out additional insurance policies on the Plant, the premiums on which, amount- 
ing to $75.80, have been paid in cash. 

We have sold to A. T. Melville & Co. at 30 days net, our re mining stock of Dried Peaches of 
last year's crop, 275 Boxes "Diamond" at 7 cents and 125 B >x:s "Orch ird" at. 5 l / 2 cents. 

James Douglas has sold to A. W. Nelson, 75 shares of his company stock. Proceed as in- 
structed on page 7. 

The Cedar Creek Milling Co. of Almi, O., hive delivered at the Drier box shop, 20 M ft. 
Poplar boards, @ #[4.50. Bill of Aug. 15; terms, 30 days net. Make out, but do not deliver 
voucher. 

Chas. A. Shaw, 568 State St., Chicago, has bought 50 shires of Treasury Stock in accordance 
with the terms prescribed by the Board of Directors, an 1 remits a certified check for 25 per cent of 
the amount, and his approved note at 60 days for the balance. (Journal Entry). Issue the stock 
and make necessary entry in Stockholder's Ledger. 



54 CORPORATION AND VOUCHER ACCOUNTING. 

Our buyer, Mr. Moody, presents certificates for purchase of raw products as follows : Cannery, 
$1775.25. Drier, $856.20. Issue voucher check. 

An invoice of miscellaneous supplies for the Cannery has been received from the Union Spice 
Co. of Philadelphia, as per their bill of Aug. 8th, $72.15. Terms, 5/30. 

Note. — Do not compute discount or fill out check part of voucher till maturity. 

One hundred bushels of apples purchased for the Drier at 50 cents per bu. have been trans- 
ferred to the Cannery. 

Stewart & Hall have remitted cash, less 5 per cent, to balance their account with Douglas, 
Fenton & Co., the amount of which was $247.50 before discount. 

Owing to a general advance in the prices of food products, it has been decided to revise the 
Quotation List and increase prices. Hereafter use Quotation List No. 2, for all sales. Put " Quo- 
tation List No. 1 " away where it cannot be used by mistake instead of the other. 

We have sold to John Maxwell, Clinton, Iowa, at 60 days, 50 Cs. Stand. Cher., 100 Cs. each of 
Per. Corn and Tomat., and 25 Box Orch. Pears. He is to pay our revised prices with a discount of 5 
per cent off if payment be made within 30 days. 

The Great Northern Hotel Co. remit cash to balance account less allowed discount. 

C. R. Jones, 495 Main St., Cincinnati, O., has purchased 75 Shares of Treasury Stock at 5 per 
cent discount paying cash for the same. For required entry see page 19. 

P. Harrington presents bill for drayage to date, $62.25. Voucher Check. 

We have sold to the Graham Grocery Co. at list prices, less 5 per cent for cash in 30 days, 60 
days net, 200 Cs. Perf. Tomatoes, 50 Cs. each of Rasp., Straw., and Blk. Jam, and 75 Bx. Dia. Peaches. 

The Ohio Lumber Co. buy of us on account 7500 ft. of rough pine at $9.50 per M., bought 
originally for the Casing Dept. of the Cannery but which was found unsuitable for the purpose in- 
tended. (Journal.) 

E. P. Moody has bought 25 shares of Treasury Stock at par, paying 25 per cent in cash and 
his note for the balance with approved security. 

Sold to C. A. Gregory & Co. at list terms: 75 Cs. B. Bk. Beans; 125 Cs. Perf. Corn; 125 Cs. 
Perf. Tomat.; 100 Cs. Perf. Peas, and 40 Bx Orch. Peach. 

We have sold to the Great Northern Hotel, at list prices net F. O. B. Chicago: 15 Cs. each 
Blk., Straw., Rasp, and Cr. Ap. Jam. The freight charges are $7.25 which we prepay in cash. 

Chas. T. Fenton buys 50 shares of Treasury Stock at 5 per cent less than par, paying for the 
same in cash. 

A. B. Holloway remits cash in payment of our bill of Aug. 3, and prepaid expressage, less al- 
lowed discount, on merchandise charge. 

The Morgan Evaporator Co., Cleveland, O., have delivered and set up machinery for the Drier, 
as per their bill of Aug. 16th amounting to $7946.75. Terms 5/30 n/60. 

The Kalamazoo Asylum sends us a bill for $8.25 for drayage paid by them on our recent ship- 
ment. We remit cash for the amount. 

Note. — In ordinary mercantile business, a payment of this kind would probably be adjusted by 
simply deducting the charge from the amount of the bill when the remittance is made. But when the 
Voucher System is used (as is the ease in most State and Government institutions) the necessity for 
agreement of amounts in the bill, with the voucher, and the check by which it is paid, requ : res that 
drayage, or other items of a similar character, be treated as separate charges, which are adjusted before 
the seller's bill is audited and paid. 

The Supt. files pay roll for the week: C. Goods Dept., $2244 70; Drier, $821.40. 

On account of ill health, our traveling agent, A. W. Long, has resigned. He presents his ex- 
pense bill for the week for $41.15. We issue voucher with payment for this bill, after which we 
hand him a check for one month's salary, less what has already been paid him. Make a Journal 
entry "General Expense to A. W. Long" crediting him one month's salary, then post and close his 
account. 

Note.— Separate Cash Book entries should be made for the voucher and the salary payment. 

Chas. Baker reports weekly expense bill for $49.10 and requests a payment of $50 on salary 
account. Voucher and check are sent him for the required amounts. 
J. A. Martin forwards expense bill for $39.60. Voucher. 



INSTRUCTIONS FOR FIRST CLOSING. 55 



The B. & O. Ry. freight bill for the week is as follows: — 

Buckeye Manf. Co., Cincinnati, Machinery, etc $92.15 

A. T. Casterlin, Benton Harbor, Mich., 240 bu. Peaches 84. 

Union Spice Co., Phila., Mdse 6.25 

Morgan Evap. Co., Cleveland, Machinery, etc 59-20 

Proceed as with previous freight bills, properly pro-rating the amount among the several ac- 
counts affected and issue Voucher Check. 

Note. — The freight on the peaches should be apportioned according to the number of bushels, not 
to the cost. 

Credit Chas. Baker and J. A. Martin each with one month's salary. 

Pay the usual office salaries for the week. 

Post the books and prepare trial balance. 

You are now to effect a general closing of the books for the purpose of ascertaining the present 
financial condition of the concern, and, should results justify it, to distribute accrued profits by means 
of a dividend. In ordinary business this would usually be deferred until the close of the season, but 
should it appear that the business of the concern had been profitable, sound financial reasons might 
exist for declaring a dividend at once. Thus the prosperity evidenced by the declaring of a sub- 
stantial dividend, might give a desirable stimulus to the market value of the Treasury Stock, or help 
to establish the credit and business standing of the company. 

After your Trial Balance has been approved by your teacher, you may proceed to prepare a 
financial statement, or balance sheet, and close the books in accordance with the following 

Instructions for First Closing. 

The model Trial Balance and Statement, on page 56 and 57, with the exception of amounts are 
identical with those required for this closing. It will be well for you to study them somewhat, be- 
fore proceeding to prepare your own statement. 

Observe that the balances of the Franchise and Treasury Stock accounts are listed among the 
resources, that the total Capital Stock is listed as a liabilty, and, that the general balance of the 
resources and liabilities, as thus listed, constitutes the net gains of the business. Notice how the 
several department accounts of Canned Goods and Dried Fruits are combined, so as to show the 
total inventories, cost, receipts, and gains for each of these two main departments of the business. 
These totals, as given under the Schedule of Gains and Losses, are obtained by combining the 
amounts of the department accounts as listed in the Trial Balance. 

Notice that the gain on the Interest Account is obtained by adding the accrued interest payable 
to date, to the total debits, and subtracting the result from the sum of the credits and the accrued in- 
terest receivable. Observe that the question as to the gain or loss on the interest account for any 
business period, depends not on whether we owe more interest than is owed to us, but on whether 
more interest payable or more interest receivable, has accrued since the last closing of the books. 

When satisfied that you understand the methods involved in the model statement, you may pro- 
ceed to the preparation of your own statement, assuming the following inventories: — 

Canned Goods $21 568.50 

" Raw Product 347-20 

" Casing 258.60 

" Miscellaneous 821.15 

Dried Fruit 1243.25 

" Raw Product 356.20 

" Casing " 1 54.90 

Fuel 9575 

Interest Receivable 79-50 

Interest Payable 187.50 

Plant (at cost) 153585. 

When your statement is prepared, submit it to your teacher for approval. 

Your statement having been submitted to a called meeting of the Board of Directors, after due 



56 



CORPORATION AND VOUCHER ACCOUNTING. 



consideration, they decide to declare a dividend of three per cent on the issued Stock, the same to be 
payable in cash, on or before Aug. 24, 1901, and instruct the Secretary to prepare a Dividend List 
and remit by check the amounts due the several stockholders as shown by the Corporation books. 
Write the minutes of this meeting, after which close the book, proceeding as follows: — 

1. Enter in red ink all inventories in the respective accounts. 

2. Prepare on a loose sheet of Journal paper, entries for closing the several accounts of the 
General Ledger, as indicated by the accompanying model entries, which are those required for the 
Model Statement, page 57. 

Canned Goods 17161.50 

C. G. Raw Product 6846.45 

" " Casing 686.05 

" " Miscel 1 506.5 5 

" " Labor 8122.45 

Entry for closing Canned Goods Dept. accounts. 

Note.— The credit items of this entry are the several balances of the Canned Goods Dept Ac 
counts AFTER the inventories HAVE BEEN ENTERED. The entry for closing the Dried Fruit Dept. Ac- 
counts is obtained in the same way. 

Dried Fruit 5646.41 

Dr. Fr. Raw Prod 2480.41 

" " Casing 41975 

" " Labor , 2746.25 

Entry for closing Dr. Fr. Dept. Accounts. 



Model Trial Balance, Aug. 17. 







Cash 


15172 


33 










Capital Stock 






250000 








Treas. " 


5"000 




20000 








Franchise 


20941 


26 










Plant 


153641 


20 










Canned Goods 


2-512 


55 


7062 


15 






" " Raw Prod. 


7258 


90 


71 


20 






" " Casing 


1015 


60 


68 


40 






Miscel. 


2341 


75 










" " Labor 


8122 


45 










Dried Fruit 


571 


16 


6721 


35 






" • " Raw Prod. 


2915 


90 


86,24 






" " Casing 


582 


50 


1 






" " Labor 


2/46 


25 










Vouchers Payable 


42816 


25 


53638 


70 






Fuel 


342 


06 










General Expense 


2618 


20 










Petty 


50 












Mdse. Disc. 


91 


42 


153 


70 






Bills Receivable 


16295 


80 


702 


30 






Bills Payable 


1321 


45 


2216 


50 






Interest 


75 


21 


192 


45 






Sales Ledger 


15894 


20 


7325 


60 






Chicaaro Tin. Co. 






192 


15 






J. A. Martin 


125 




150 








Eaele Can. Co. 


62 95 


115 


80 






Loss and Gain 


178'30 










Ohio Lumber Co. $ 


75 60 


96 


75 






Stock Discounts and Premiums 


650 












Chas. Baker 


200 




125 




348918 29 


348918 29 

















MODEL STATEMENT, AUG. 17. 



57 



Model Statement, Aug. |7. 



RESOURCES. 

Cash 

Plant Inventoried at cost 

C. Goods 

" Raw Prod. 
'• " Casing 
" , Miscel. 
Dr. Fruit 

" " Raw Prod. 

" " Casing 
Fuel 

Bills Receivable 
Sales Ledg. Acct. 
Interest Rec. (Accrued to date) 
Petty Expense (Unexpended) 
Chas. Baker (Salary overdrawn) 
Treasury Stock (Unsold) 
Franchise 

LIABILITIES. 

Capital Stock 
Vouchers Payable 
Bills 

Interest " (Accrued to date) 

Chicago Tin. Co. 
Eagle Canning Co. 
Ohio Lumber Co. 
J. A. Martin (Salary account) 
Bal. Net Gain 



Schedule of Gains and Losses. 

GAINS. 



Invt. $21632.56 
341.25 
261 15 
835.20 

$1251.16 
349 25 
16 J. 75 



C. G. Dept. Credits 
" Invt. 
" Cost 
" Gains 
Dr. Fr. Dept. Credits 
Invt. 
Cost 
Gains 
Interest Credits and Inventory 
" • Debits _«' 
" Gains 
Mdse. Discounts 

LOSSES. 

Gen. Expense 

Petty Expense Reserved 

" " Unexpended 

" " Loss 

Fuel Cost 

" Invt. 

" Loss 
Loss and Gain 
Stock Prem. and Dis. 

Bal. Net Gain 



$ 7201.75 
230:0.16 



$ 6807 59 
1763.16 



f30271.91 
21551 25 



$ 8570 75 
6815 8 L 

$ 273.65 
267.46 



$ 50.00 
9.15 

$ 342.06 
97.30 



15172 
153641 



23070 



1763 

97 

15593 

8568 

81 

9 

75 

30000 

20941 



16 



16 
30 
50 
60 
20 
15 



26 



250000 
10822 



45 



895 05 

192 25 

192J15 

52 85 



15 



8720 66 



1754 



94 



619 
62 28 



2618 



40 



244 
178 
650 



20 



85 



269012 86 



262200 90 



6811 96 



10544 



3732 



6811 



07 



11 



96 



58 CORPORATION AND VOUCHER ACCOUNTING. 

Canned Goods 8720.66 

Dried Fruit : 1 7 54.94 

Interest 6.19 

Mdse. Disc 62.28 

Loss and Gain 10544.07 

For closing accounts showing gains. 

Loss and Gain 3553-8i 

General Expense 2618.20 

Petty Expense 40-85 

Fuel 244.76 

Stock, Disc, and Prem 650. 

For closing accounts showing losses. 

Loss and Gain 68 1 1 .96 

Dividend No. 1 6600. 

Surplus 211 .96 

For balance of L, & G. carried to Surplus Account and Dividend 
No. 1, for dividend of 3 per cent on issued Capital Stock $220,000 

When your closing entries have been approved by your teacher, copy them into your Journal, 
post them to the Ledger, rule up the several accounts, and bring down all inventories. 

Note.— It is unnecessary to close the other ledger accounts, but this may be done in anv case when 
the totals for forwarding are inconveniently large, as in the case of the Sales Ledger, Bills Receivable, 
Vouchers Payable and a few other accounts. Should it be found desirable to balance and close any of 
these accounts, it may be done withoutmaking Journal entries. It is in accord with the latest account- 
ancy practice, however, to employ Journal entries, when closing the several financial accounts at the con- 
clusion of a business period. 

Before beginning the records of the new business period, prepare a Preliminary Trial Balance, 
in order to be assured that the books are in balance. Mistakes may have occurred in forwarding 
the balances, etc. Before preparing this Trial Balance, be sure that all inventories or balances are 
properly brought down. When the Trial Balance is prepared, submit it to your teacher for approval, 
after which continue business as follows : — 

Memoranda for WeeK Ending Aug. 24. 

The Cash dividend of three per cent on the issued stock is to be distributed in accordance with 
the vote of the Board of Directors. Enter in the Dividend Book, as shown on page 17, crediting 
each stockholder with the sum to which he is entitled as shown by the number of shares standing to 
his credit in the Stockholders' Ledger. Assuming that checks have been drawn and remitted to the 
several Stockholders, make a credit entry in the Cash Book, charging " Dividend No. 1," with the 
amount of the dividend, post this entry, and properly rule up the account. 

We have received from the Kalamazoo Asylum 4 their voucher with check for our invoice of 
Aug. 17th. 

Voucher No. 15, favor Chicago Sugar Refining Co., has been paid with Chicago dft. less the 
discount to which we are entitled by the terms of sale. 

Arthur Moore hands us cash for his note given July 27, in payment of the first installment of 
his stock, with 6 per cent interest to date. 

The Cleveland Fruit Co. of Cleveland, O., present bill of Aug. 20 for 125 Bu. Peaches at 95c. 
50 Bu. of this fruit is turned into the Drier and the remainder to the Cannery. (Voucher Check). 

The Great Northern Hotel Co. remit Cash to balance account. 

We have purchased of Braille & McKnight, St. Louis, terms 5/30, tinning supplies for Cannery 
as per bill rendered Aug. 22, for $149 64. 

We have sold Angell & French, Cleveland, O., at list terms, 150 Cs. Stan. Cher,; 75 Cs. B. Bk. 
Beans; and 40 Cs. each of our full line of jellies. 



MEMORANDA FOR AUG. 24. 59 



We have received from R. S. Cox of Monmouth, O., a shipment of 385 Bu. White Beans, and 
his bill for same at $[.75 per bushel, dated Aug. 17. Voucher Check. 

C. A. Gregory & Co. remit Cash in payment of our invoice of Aug. 3, less allowed discount 
and our memorandum of credit of Aug. 10. 

Pay to Ohio Telephone Co. telephone rent to Aug. 1, $4.75, out of Petty Expense Fund. 

Farnham, Blair & Co. hand us Cash to balance their account to date. 

Sold to Marvin & Wright, at list terms, 75 Cs. Pie Peach.; 50 Cs. Pie Blk. and 40 Cs. each of 
Stan. Pears and Cher. They remit with this order a check for such a sum as will entitle them to a 
credit of $400. 

The Treasurer of the company hands you a check for $25 for Petty Expense Fund. 

A. J. McCoy pays his note of Apr. 26, 1901, favor of Douglas, Fenton & Co. for $126.55, w ^h 
interest from date at 6 per cent. 

Note.— In computing the interest, find the time by taking the exact number of days from Apr. 26 
to Aug. 24. 

M. C. Anderson buys on account at 30 days, refuse products of the Cannery amounting to 
$65.20, and of the Drier $38.75. As this is not a Sales Ledger account, make Journal entry. 

The Delavan Machine Co., Hillsdale, O., present their bill of Aug. 20, for repairs on machinery 
$19.60. Hereafter, unless otherwise directed, issue Voucher Checks for all bills presented except 
those for time purchases. Use your judgment as to the accounts to be charged. 

At a meeting of the Board of Directors, held on Aug. 19, it was decided to sell no more Treas- 
ury Stock, except at a premium of 5 per cent, payment to be made in cash, or in first class securities. 
Supt. Barnes recommended that Henry Simpson be employed as night watchman in place of J. 
Ryan, who failed to report for duty, at a salary of $15 per week, his employment to date from Aug. 
1 7. The desired action was taken. 

Write the minutes of this meeting. 

On Aug. 18 a. small fire occurred in the Cannery warehouse. The losses as adjusted by the 
Mutual Ins. Co. are as follows: — 

Building $75, 15 cases Cr. Ap. Jel. at list prices, several barrels of sugar (partial damage) $15. 
The entire amount has been remitted by check. Enter in Cash Book crediting "Plant," "C. Goods" 
and "C. G. Miscel." 

The Kalamazoo Asylum has ordered at list prices, net, I 5 Cs. each of Rasp, and Straw. Jam, 
and 15 Cs. Blk. Jel., 5 Cs. Stan. Ap. B., and 20 Cs. each of Rasp, and Cr. Ap. Jel. We have prepaid 
freight anddrayage in cash, $37.90. 

The Graham Grocery Co., Hannibal, Mo., remit Chicago draft for their acceptance of July 25, 
$456.80. 

We have received from A. C. Marmadake & Co., Columbus, O., a shipment of nails and other 
hardware for our Drier Casing Department, per their bill of Aug. 16 amounting to $71.56. The 
goods are billed at 30 days, less 5 per cent if paid at maturity. 

Sixty bushels of Pears, costing 45c per bu., have been transferred from the Drier to the Cannery. 

Douglas, Fenton & Co.'s note of July 1, 1901, for $428.60 in favor of Eugene Barlow & Sons, 
with interest at 6 percent from date, has been paid in Cash. 

We have paid Voucher No. 16, favor Ohio Lumber Co., with N. Y. dft. 

S. A. Rogers & Co's bill of Aug 21 for stationery, etc., $425, has been paid out of Petty Ex- 
pense fund. 

We have sold to Stuart & Hall at list terms; 45 Bx. Orch. Peach.; 125 Cs. Perf. Tomat; 100 Cs. 
Perf. Gr. Beans; and 50 Cs. Stan. Peas. 

A. B. Hillis, Hillsdale, O., has purchased 25 shares of Treasury Stock at 5 per cent premium 
giving his 60 day note for the same with approved security. 

We pay with voucher check the bill of Aug. 23, rendered by L. B. Morley & Sons, Hillsdale, 
O., for repairing damage to building, caused by fire, $62.45. Debit " Plant," as this account was 
credited with the insurance. 

We have sold to T. C. McLean & Co. of Hillsdale, O., the following goods, at a discount of 6 
per cent from our list prices; they pay $250 in cash and hand us their acceptance at 30 days for 
balance: — 25 Bx. Dia. Ap.; 150 Cs. Stan. Tomat.; 25 Cs. each of Perf. Blk., Cher., and Pears; 75 
Cs. Perf. Peach., and 40 Cs. B. Bk. Beans. 



60 CORPORATION AND VOUCHER ACCOUNTING. 

The Graham Gro. Co. report a shortage on their order of Aug. 17 of 5 Cs. Per. Tomat. and 1 
Cs. Blk. Jam. Have sent them memorandum of credit for the amount. 

We have sold to the Ragle Canning Co. on acct. 50 Bx. Dia. Ap. at 6^c per lb. delivered at our 
warehouse. Journal entry. 

The Student buys of A. W. Nelson, 20 shares of Stock. Mr. Nelson first surrenders Certificate 
No. 17 for seventy-five shares, and has issued to him two other certificates for 55 and 20 shares, 
respectively. He then transfers the latter to the Student. 

We have paid city taxes on company property amounting to $287.95. 

H. T. Bell buys 25 shares Treasury Stock at 5 per cent above par, handing us a certified check 
for the amount. 

Note.— This transaction should be entered in the Cash Book, "Treasury Stock" and ' Stock Dis. 
and Premiums" being credited in separate entries. 

The Buckeye Manufacturing Co., Cincinnati, have delivered and set up new machinery for the 
Drier and rendered a bill for the same, dated Aug. 22, to the amount of $4426. 70. We pay this 
bill, remitting voucher with N. Y. dft. 

Sold S. H. Arthur & Co. at list prices, less 5 per cent, terms cash on receipt of goods: 75 Bx. 
Dia. Peach.; 125 Cs. Perf. Tomat.; 75 Cs. Stan. Peas; and 50 Cs. Pie Peach. 

Buyer, E. P. Moody, presents foreman's receipts for raw products purchased and delivered to 
the Cannery, amounting to $1568.75 and to the Drier, $862.15. Voucher Check as heretofore. 

We pay P. Harrington's drayage bill to date, $47.60. Voucher Check. 

We have sold to the agent of Benson, McGuire & Co., Chicago, dealers in second hand machin- 
ery, lot of discarded machinery, castings, belting, etc., as per our invoice, amounting to $2368.90. 
Terms Cash on receipt of shipment at Chicago. Journal entry. 

Finding the sugar purchased of the Chicago Sugar Refining Co., on the 3rd inst , not so well 
adapted to our purpose as other brands, the superintendent has sold out the remaining stock on 
hand, 42 barrels, 300 lbs. each, to various local merchants for cash at 5^c per lb. and turns in 
the money received. 

On Aug. 17, we drew a draft on C. H. Bell & Co., Muncie, Ind., through our local bank for 
the amount of their balance favor Douglas, Fenton & Co. The bank now reports collection, and 
has placed the amount to our credit, less 50 cents for collection. Debit Cash for the whole 
amount, and credit Cash for the collection, charging the item to General Expense. 

We have arranged with the steward of Hartwell College, Mayfair, O., to supply that institution 
with our goods at such prices as maybe agreed upon, we to prepay the freight charges. The first 
order is for canned goods at ten cents per case in advance of our list prices, as follows : 60 Cs. 
Perf. Tomat.; 25 Cs. each of Perf. Peach., Cher., Pears, and Blackberries. Also, 20 boxes Dia. Ap. 
at 7^c, and 25 Bx. Dia. Peach, at 8^c. Terms cash on receipt of goods. The freight, which we 
pay in Cash amounts to $9.05 for the Dried Fruit and $10.65 for the Canned Goods. 

Our traveling salesmen report Expense Bills for the week as follows: Chas. Baker, $5 1 .90; 
J. A. Martin, $46.75. Proceed as heretofore. 

We pay B. & O. Ry. freight bills for the week as follows : — 

Cleveland Fruit Co., 7800 lb. Peaches, 10c per 100, (Cannery $4.68. Drier $3.12). Braille & 
McKnight, tinning supplies $21.50. R. S. Cox, Monmouth, O., carload beans $32.75. (Cannery). 
Marmaduke & Co., nails, etc., for Drier casing department 14.20. Pro-rate the amounts among 
the several accounts affected as heretofore. 

The Treasurer has drawn the Company's check for $25, as a contribution to the Fireman's 
Relief Fund, as authorized by the Directors. Charge to General Expense. 

Supt. Barnes reports weekly pay roll as follows : — 

Cannery $2369.75; Drier $986.20. 
. The officers' weekly salaries are paid as heretofore, with the additi m of Henry Simpson's salary 
as night watchman $15. 

Post the books and take off a Trial Balance. When the same is approved, continue business as 
follows : — 



MEMORANDA FOR AUG. 31. 61 



Memoranda for Week Ending Aug. 31. 

We have received from the American Sugar Refining Co., Cincinnati, an invoice of 50 bbls. 
Standard Granulated Sugar (300 lb. ea.) at s : }{ c P er lb - bill ed Aug. 22. Terms, 10 days net. We 
send voucher check. 

E. P. Moody has transferred 25 Shares of the Company Stock (Cer. No. 20) to C. R. Jones. 

A. Monroe & Co. remit cash for their purchase of July 27. 

The Great Northern Hotel Co. order at list prices, net, F. O. B., Chicago, 50 Cs. each of Perf. 
Peach., Pears, Blk., and Cher., and 75 Cs. each of Perf. Corn and Peas. 

We prepay freight in cash, $32.50. 

The Buckeye Manf. Co., Cincinnati, has placed additional machinery in the cannery, as per 
bill of Aug. 27, 52568.90 which is paid with Voucher Check. 

On the authority of the Directors, our bank balance has been increased by the deposit of the 
company's 60 day note for $5000. the bank crediting our account for that amount, less 63 day's dis- 
count (interest) at 8 per cent. (Debit Cash for face of note and credit Cash for discount.) 

A. F. Hanlon has purchased 30 Shares of Treasury Stock at 5 per cent premium, paying for the 
same by transferring to the Company H. A. Ellison's note (secured by mortgage) for $2500 and cash 
for balance. 

We have sold to A. B. McCall, proprietor of the LaClede Hotel, Evanston, Ind., at list prices 
net, 20 Cs. each of our Stan. Pears, Cher., Corn, and Peas. He is- to remit cash when goods are re- 
ceived. 

The Ohio Coal Co., Vernon, O , have delivered three cars of Hocking Valley coal, 46400, 47500 
and 46100 lbs., at $ [.25 per Ton as per bill of Aug. 26. Terms Cash. Voucher Check. 

S. H. Bannon & Co., Syracuse, O., order at list terms 75 Cs. Perf. Tomat., 60 Cs. B. Bk. Beans; 
45 Cs. Perf. Peas; and 50 Boxes Dia. Peach. 

Fayerweather & Ladew, Chicago, send us bill dated Aug. 20 $167.50, for machinery belting 
that has been duly received and accepted. Terms 5/ 30 n/60. 

A. B. Holloway of Columbus, Ohio, has failed and we have accepted a cash settlement of his 
account at 50 cents on the dollar, the receiver sending us N. Y. dft. for the amount. 

Note. — Since the Sales Ledger Account will be credited from the Journal, make no entry of this 
payment in the Sales Ledger column of the Cash Book. 

C. A. Gregory & Co. have ordered at list terms 125 boxes Dia. Ap.; 175 Bx. Orch". Peach., and 
250 Cs. each of Perf. Peach, and Tomat. 

Wilson & Gray's bill for desk and chairs for use in the office, $16.25, has been paid out of petty 
Expense Fund. 

L. M. Barnes has purchased 20 Shares of Treasury Stock at 5 per cent premium, paying for 
the same with his 30 day note. 

We have sold to the W. B. Hoyt Co., Chicago, the following wholesale order at prices given; 
F. O. B., Hillsdale; 500 Cs. Perf. Corn @ 90c; 500 Cs. Perf. Tomat. @ 85c; 400 Cs. B. Bk. Beans @ 95c; 
300CS. Perf. Peas @ $1.25; 200 Bx. Dia. Peach at 8c per lb.; they are to settle on receipt of the 
goods, with three acceptances of $500 each, at 30, 60, and 90 days respectively, and cash for balance. 

Mr. Moody presents foreman's receipts for raw products purchased and delivered as follows : 
Cannery $1 132.40; Drier $528.75. 

Traveling salesmen's expense bills for the week, which are paid as usual, J. A. Martin, $47.56; 
Chas. Baker, $61.1 5. 

The pay roll for the week, is as follows: Cannery $2387.50. Drier $95 1.1 5. 

The B. & O. Ry. freight bill as follows :— 

Am. Sugar Refining Co., Cincinnati, 50 bbls. Sugar for Miscellaneous Dept. of the Cannery, 
$26.50; Buckeye Machine Co., machinery, etc., $3940; Ohio Coal Co. 3 cars coal $67.90; Fayer- 
weather & Ladew, belting, etc., $13.50. 

The weekly salaries are paid; amounts the same as last week. 

Post the week's business and take off trial balance. If correct, proceed with the next week's 
business as follows : — 



62 CORPORATION AND VOUCHER ACCOUNTING. 

Memoranda for Week Ending Sept. 7. 

We have remitted to C. H. Webster & Co. our check with Voucher No. 26. 

We have purchased of the Ohio Lumber Co., Cleveland, O., for Drier Casing Dept. per bill ol 
Sept. 2, 17 M. ft. spruce lumber @ $11 65. Terms 60 days, 5 per cent off if paid in 30 days. 

Benson, McGuire & Co. remit N. Y. drft. for old machinery, etc., sold them Aug. 24. 

A. T. Melville & Co. have ordered at list terms, 75 Bx. Dia. Ap. and 50 Cs. each of Perf. Peach., 
Pears, and Cher. 

C. A. Gregory & Co. report that in our last shipment to them, 8 boxes of "Orchard" Apples 
were sent instead of the "Diamond" brand. We send them a memorandum of credit for the amount 
of the discrepancy. 

We have remitted to the Chicago Tinning Co. cash to balance account, also to cover amount of 
Voucher No. 31 less allowed discount. (Two Cash Book entries). 

Note —The discount period for the account expired on Sept. 5, but it will be assumed that the re- 
mittance was made in time to save the discount. 

A. B. McCall remits check for his purchase of Aug. 31. 

Marvin & Wright, Cincinnati, order at list terms; 125 Bx. Dia. Peach, and 150 Cs. Perf. T0m.1t. 

R. C. Noble & Co. of Sharon, Ind., have recovered their financial standing and have arranged 
to pay in full all their accounts settled under the receivership. They have sent us a check for the 
portion of their account that was charged to Loss and Gain. 

We have handed B. F. Sloan our check for rent of Warehouse to Oct. l, $75. 

The W. B. Hoyt Co. of Chicago have remitted us a N. Y. drft. for that part of our bill of Aug. 
31 that was to be paid in cash, also the three acceptances, of $ : oo each, 30, 60, and 90 days. 

The Union Label Co. of Cincinnati, have delivered an assortment of labels for canned goods 
and their bill for the same at 30 days, dated Sept. 2, for $124.40. (Charge C. G. Casing Dept.) 

The Kalamazoo Asylum has remitted voucher with check for their order of Aug. 24. 

J. M. Rice & Co., Louisville, Ky., order at list terms 75 Cs. each of Stan. Peach., Pears, Cher., 
and Corn. With the order, they remit N. Y. drft. for their purchase of Aug. 10. 

James Douglas has sold all his remaining stock to Geo. P. Morton and A. F. Hanlon, Mr. Mor- 
ton taking 50 shares and Mr. Hanlon the remainder. Mr. Douglas first surrenders the shares at 
present standing to his credit, taking two other certificates for the required amounts which he trans- 
fers to Messrs. Morton and Hanlon. Issue the required certificates, cancelling those surrendered; 
make the necessarry entries in the Stockholders' Ledger and close up Mr. Douglas's account in this 
book. 

S. H. Bannon & Co. remit cash for their purchase of Aug. 10, less allowed discount. 

We remit to Ohio Lumber Co. cash to balance account. 

Stuart & Hall remit cash for their purchase of Aug. 10, less allowed discounts. 

The Graham Gro. Co. send a trial order for 40 Cases each of our Blk., Rasp., Straw., and Cr. Ap. 
Jelly. We allow a special discount of 5 per cent from list prices, and bill goods at 30 days. 

We remit Voucher Check No. 43 to Union Spice Co., Philadelphia, for amount of their bill of 
Aug. 7, less allowed discount. 

J. A. Martin sends weekly expense bill amounting to $53. 50 and requests a remittance of $25 
on salary account, which request is complied with. 

A called meeting of the stockholders was held at the Company office on Sept. 6, and was at- 
tended by stockholders representing a majority of the stock. At this meeting the following business 
was transacted: — 

1. Minutes of previous meeting read and approved. 

2. The Secretary read the resignation of James Douglas as Treasurer of the Company. 
Motion carried to accept and place on file. 

3. Mr. Chas. T. Fenton was elected Treasurer to fill out Mr. Douglas' unexpired term. 

4. Mr. Martin offered a resolution that the Secretary be instructed to withdraw from sale and 
retire that portion of the Treasury Stock that was still unsold. Considerable opposition to the pro- 
posed measure was developed, and a vote by shares was demanded. The Secretary prepared a list 
of the stockholders voting, with the number of votes to which each was entitled as follows: — 



MEMORANDA FOR SEPT. 7 AND 14. 63 



In favor of the resolution: 

A. F. Hanlon Shares 

Geo. P. Morton " 

Student " 

Arthur Moore " 

Opposed to the resolution: 

L. M. Barnes Shares 

E. P. Moody " 

A. W. Nelson " 

H. T. Bell " 

A. B. Hillis. " 

The chair declared the resolution adopted. 

5. On motion it was resolved to declare a second Cash Dividend of five per cent, to be payable 
on Sept. 14, provided, the same should be justified by the results of the month's business. 

6. Mr. Chas. A. Townsend, a gentleman engaged in promoting the formation of the American 
Food Supply Company, was then introduced and addressed the meeting. Mr. Townsend explained 
that a number of leading canneries had been consolidated into a new corporation, the American 
Food Supply Co., located at Cleveland, O., and that his present mission at Hillsdale, was to induce 
the stockholders of the Central Canning and Drying Co. to join the combination. He then offered 
many arguments and illustrations to show the various advantages of such a course. After a quite 
general discussion of the proposed consolidation scheme, the matter was, on motion, referred to a 
committee consisting of Directors Hanlon, Morton and Moore, who were instructed to investigate 
the whole proposition fully and make a report at a special meeting of the stockholders to be called 
for the purpose on Saturday, Sept. 14, at the Company's office at 8 o'clock p. m., due notice of which 
should be sent by the Secretary, to each stockholder. Meeting adjourned. 

Write up the minutes, including a correct record of the vote on retiring the Treasury Stock, af- 
ter which make the necessary Journal entry for retiring the unsold stock. See page 22. 

Prepare a written notice as required for mailing to the stockholders, and submit the same to 
your teacher. 

Mr. Moody turns in foremen's receipts for raw products purchased for the week. Cannery, 
#942. 65; Drier, $497.60. 

The B. & O. Ry. presents freight bills as follows: — 

Ohio Lumber Co., Cleveland, O., car load lumber $21.50 

Union Label Co., Cincinnati, box of labels 2.75 

Pay as usual and charge to proper accounts. 

We pay P. Harrington's drayage bill to date, $71.40. 

The weekly pay-roll is as follows: — 

Cannery, $2297.20; Drier, $1021.15. 

Pay office salaries for same amounts as last week. 

Post the books and submit trial balance as usual. 

Memoranda for Week. Ending Sept. 14. 

We have remitted to Cedar Cr. Mill Co. Voucher Check No. 41 for their bill of Aug. 15. 

The Eagle Canning Co. hand us cash to balance account. 

The foreman of the Drier presents a charge ticket for 7^ M. ft. boxing lumber ©$13.50, 
transferred to the Cannery. 

Through Mr. C. M. Fairchild, agent of Angell & French, Cleveland, O., we have sold to that firm 
at cash terms the following goods delivered at the Cannery at the prices given : — 

1000 Cases Perf. Tomat. @Syj4c; 500 Cs. Perf. Peas @ $1.25; 250 Cs. Perf. Gr. Beans @ $1.10; 
250 Bx. Dia. Ap. at 6j^c per lb ; and 250 Bx. Dia. Peach, at 8^c per lb. 

Mr. Fairchild hands us a check for $3000 to apply on the order, the remainder to be paid when 
the goods are received and the invoice verified by the buyers. 



64 CORPORATION AND VOUCHER ACCOUNTING. 

Our banker has notified us that the personal check given by A. B. McCall of Evanston, Ind., 
for his purchase of Aug. 31, and which was deposited Sept. 7, has been refused by the Drovers' Bank 
of Evanston, the bank upon which it was drawn. The reason given for dishonor, was that Mr. Mc- 
Call had no funds to his credit when the check was presented. The check has been protested, the 
fees being $1.75. 

We hand our bank a check for the amount of the protested check plus the fees, and credit Cash 

for the whole amount, charging "Protested Paper.'' 

Note.— Cases of this kind are quite frequent among concerns that do much business by mail. To 
carry an account with "Protested Paper" is usually more convenient than to recharge the amount to the 
delinquent customer's account. If after the customer is notified of the returned protested paper, he 
should make a remittance for the amount, cash is debited and "Protested Paper" is credited. This dis- 
posal of the transaction obviates the inconvenience of making entries affecting the Sales Ledger ac- 
counts. When the books are closed, the balance of the Protested Paper account stands, as a resource, 
but if there are items on it that represent undoubted losses to the business, these may be segregated, 
and their amount closed into Loss and Gain. Protested notes may be carried to this account in the 
same way. Many firms deposit their customers' notes with their bankers, the bank crediting them as in 
the case of cash deposits. In this case, should the note be dishonored and protested, Cash is credited 
and "Protested Paper" debited when the note is returned, the same as in the case of a protested check. 

The Graham Grocery Co. remit Chicago dft. for our bill of Aug. 17, less Mem. of Credit and 
allowed discount. 

C. A. Gregory & Co. have settled their account by giving us their acceptance at 30 days for the 
amount of our bills for Aug. 17 and 31, less allowed discount and credits. (Deduct Mem. of Credit 
on dried fruit before computing discount.) 

E. P. Moody's note of Aug. 10, given as payment of Installment No. 3, is paid in full, in cash 
with the interest due to date. 

We have taken out an insurance policy with the National Fire Ins. Co. on goods stored in 
warehouse, the premium on which amounts to $1 1.25, and which we have paid in cash. 

We have sold to M. C. Anderson at 30 days, refuse products of the Cannery, $74.90, and of the 
Drier, $47.25. 

S. C. Joy, Steward of Hartwell College, remits his check in payment of our bill of Aug. 24, and 
sends another order for 10 Cs. each of our entire line of Jellies, 20 Cs. B. Bk. Beans, and 25 C s. 
Perf. Corn. We charge 20 cents in advance of list prices. Terms, Cash. We prepay freight 
charges in cash, $7.20. 

A. T. Melville & Co. remit cash in payment of our bill of Aug. 17. 

A. Monroe & Co. balance their account by handing us their 30 day note bearing interest at 8 
per cent. 

We send Voucher Check No. 5 5 to A. C. Marmaduke & Co. for amount of their bill, less discount. 

A special sale of our goods, delivered at the Cannery,- has been made to Dalton, Springer & 
Allen, 187-195 Wells St., Chicago, as follows : — . 

1750 Cs. Stan. Corn @ 60c. 
945 Cs. Stan. Tomatoes @ 55c. 
500 Boxes Orch. Peach, at 6^c per lb. Terms, net Cash. 

The Hillsdale Fuel Supply Co., Hillsdale, O., have delivered at the Cannery 75 Tons Hock. 
Val. coal @ $2.15, per bill of Sept. 12. Terms 30 days. 

H. A. Ellison's note for $2500 dated July 28, in favor C. T. Hanlon and transferred to the Com- 
pany, has been paid in full with interest at 6 per cent from date. 

J. A. Martin has sold all his Canning Co. Stock to Arthur Moore. Make the necessary 
transfers. 

O. C. Oliver & Co. remit Cash to balance their account less allowed discounts. 

Chas. Baker reports expense bill for previous two weeks $72.50, and J. A. Martin for one week 
$52.70. 

Mr. Moody, the buyer, presents foremen's receipts for raw products purchased for the week as 
follows: Cannery, $1643.85; Drier, $791.20. 

The weekly Pay Roll is as follows: Cannery, $2187.50; Drier, $1129.76. 

P. Harrington presents drayage bill to date, $26.95. 

The usual weekly salaries are paid. 

J. A. Martin and Chas. Baker are each credited with one month's«salary, and checks are sent 
them for such sums as will balance their accounts. 

We have deposited at the bank C. A. Gregory & Co's acceptance of this date, the same being 
placed to our credit less ^ of one per cent discount from face. (Two entries in Cash Book as in the 
case of the Company's note deposited Aug. 31). 



MEMORANDA FOR SEPT. 14. 



65 



A. B. McCall of Evanston, Ind., has written a satisfactory explanation regarding the protesting 
of his check, and stating that he will in a few days send draft for the amount, plus the protest fees. 

The purchasing agent of Dalton, Springer & Allen has handed us a check for the amount of 
their recent purchase. 

You will now proceed to the second general closing of the books, carrying out the following 
directions, in the order given : — 

i. Post the books to date and prepare a trial balance which you will submit to your teacher 
for approval. 

2. ^repare a schedule showing the balances of the several accounts in the Sales Ledger. 
Compare the total of these with the balance of the Sales Ledger Account. 

3. Prepare a statement of the business for the period commencing August 17, and ending Sep- 
tember 14, following the general form of your statement for August 17, and assuming the following 
Inventories : — 

Note.— In preparing this statement, be very careful to make the right disposal of the inventories 
of the Interest Account. The General Expense Account must also be credited on the statement with 
the inventory of unexpired rent and insurance. 

Inventories for Closing Sept. 14. 



Plant (inventory at cost) 
Canned Goods 

" • " Raw Prod. 



Dried Fruits 



Casings 
Miscel. 



Raw Prod. 
" " Casings 

Fuel 

Interest Receivable 
Interest Payable 

General Expense (unexpired rent and insurance) 
Petty Expense (as per P. Exp. Book) 



158419 


55 




34598 


60 




287 


50 




291 


75 




564 


20 




6975 


60 




328 


10 




125 






160 






76 


40 




116 


25 




95 







4. When your statement is prepared, submit it for approval. 

5. After entering the inventories in the several accounts, close the Ledger by Journal entries 
as in your last closing. 

6. Close and rule up the Cash Book and all accounts in the General Ledger that are in bal- 
ance, forwarding all inventories. 

7. Make the necessary entries in the Journal and Cash Book and Dividend Book for declar- 
ing a cash dividend (Dividend No. 2) of 5 per cent of the issued stock. Post these entries and 
rule up the accounts that are in balance. 

Note.— As the dividend called for is greater than the amount of the net gain, the excess must be 
drawn from the surplus account. 

The following form of entry is required : — 

Loss and Gain ______ 

Surplus _______ 

Dividend No. 2 ___ __ ___ 

A called meeting of the stockholders to consider the advisability of effecting a sale of the busi- 
ness to the American Food Supply Co., was held on Sept. 14, 1901. 

The advisory committee, reported favorably upon the acceptance of the following propositions, 
which have been formally submitted by representatives of the American Food Supply Co. 

1. That the C. C. & D. Co. convey through bill of sale and deed, to the A. F. S. Co. all the 
real estate, plant, machinery, stock and other property, also, all accounts, cash, bills and other assets, 
as shown by the financial statement for September [4, less the amount of net gains to date which 
are to be distributed in Cash among the several stockholders, before the transfer is made. 

2. The A. F. S. Co. are to assume the payment of all accounts, notes, acceptances, or other 
liabilities of the C. C. & D. Co., as shown by the books on this date. 

3. In consideration of this sale and transfer of their business, and of the surrender ot the C. C. 
& D. stock at present held by them, the stockholders of the C. C. & D. Co. are to receive the amount 



66 CORPORATION AND VOUCHER ACCOUNTING. 

ot $276,000, in paid up stock of the A. F. S. Co., which is an increase of twenty per cent over 
the present amount of issued stock of the C. C. & D. Co. Said stock is to be distributed among the 
stockholders of the C. C & D. Co. in proportion to their present holdings of stock as shown 
by the Company books. 

4. Upon the acceptance of this proposition, and the formal and legal transfer of the property in 
accordance with the terms stated, the representatives of the A. F. S. Co. are to assume immediate 
control and management of the business and property of the C. C. & D. Co. 

After a full discussion of the propositions submitted, it was unanimously decided to accept them, 
and the officers of the company were, on motion, authorized to have the necessary legal papers pre- 
pared for effecting the sale in accordance with the terms of the propositions as submitted. 

The Secretary reported that after paying Dividend No. 2, there was a balance in the Surplus 
Fund of about eighty-seven dollars, that was still undistributed, and he invited suggestions from the 
stockholders present as to the best means of disposing of it. Mr. Martin called attention to the 
worthy work and purposes of the Canners' Benefit Association, an organization that had lately been 
formed among the employees of the Company, and he moved that the balance of the Surplus Ac- 
count, referred to, be donated in cash to this organization. The motion was adopted by unanimous 
vote. 

The meeting then adjourned. 

The books are now to be finally closed and the corporation dissolved through the transfer of its 
interests and the surrender of stock by the stockholders. To accomplish this, proceed as follows: — 

1. Make a credit entry in the Cash Book for the balance of the Surplus Account, to be donated 
to the "Canners' Benefit Association;" when this entry is posted, the Surplus Account will, of course, 
be in balance. 

2. Balance and rule up the Cash Book, and bring down the balance of cash on hand. 

3. Make Journal entries as follows, for the double purpose of setting forth the facts as to the 
sale of the business to the American Food Supply Co., and to effect the closing of the books, upon 
the dissolution of the Central Canning and Drying Co.: — 

Note.— The items of these entries, are with the exception of the cash balance, thesameas those given 
in thelast statement, and should be taken from it. As the Surplus Account is closed, its balance is 
omitted. 

(a) Make a Journal entry, charging the American Food Supply Co. with the entire resources 
of the business as shown by the balances of the several resource accounts, and crediting these ac- 
counts with their several balances. In the explanation for this entry, state the terms and conditions 
of the sale, by which the business of the Central Canning & Drying Co. is to be terminated. 

(b) Make a Journal entry, crediting the American Food Supply Co. with the total of the lia- 
bilities, and debit the liability accounts with their several balances. Explain that, by the terms of the 
sale, these liabilities are to be assumed by the American Food Supply Co. 

5. Post these entries, after which the Cash Book and the accounts of the General Ledger be- 
ing in balance, are closed and ruled up. 

Note.— Add each side of the several accounts, before ruling them up, to see that no error has been 
made in transferring the amounts. 

6. Assuming that all stock has been surrendered, write the word "Surrendered" in red ink 
across the face of each certificate in the Stock Certificate envelope, and re-attach the several certifi- 
cates to their original stubs, then debit each account in the Stockholders' Ledger with the amount of 
surrendered stock and rule up the several accounts. 

Concluding Suggestions. 

The act of selling out the property, good will, etc., of the business, and the formal surrender of 
the stock, effects the dissolution of the corporation, although, it does not destroy the individual lia- 
bility of the several incorporators for the company debts and obligations, should the American Food 
Supply Co. default in its discharge of the same. 

In most states, the laws prescribe the manner in which a corporation may be legally dissolved, 
and when such a step is contemplated, it is necessary to proceed in accordance with these laws. 

At this point, it is well to admonish the student that in all matters affecting the legal status of 
a corporation, it is the well-established custom for the parties interested to proceed only in accord- 



CONCLUDING SUGGESTIONS. 67 



ance with the advice and co-operation of a competent attorney. To him is assigned the task of pre- 
paring the various legal documents required, as the necessity for having these made out in proper legal 
form is a matter of too much importance to be left to inexperienced hands. 

It is also well for the student to perceive that the consolidation of several corporations by a 
bona fide sale, is a very different affair, from the formation of a "combine" or "trust," in which 
the several combining corporations continue to maintain their corporate existence, although operated 
as a single concern. The first method is entirely lawful, and does not differ materially from those 
business consolidations among individuals or partnerships, in which one man, or firm, buys out, or 
forms lawful partnerships with the others. The second method of combination, however, is now con- 
trary, not only to the laws of the United States, but to those of most of the several states, and in 
point of fact, the " trust," as an illegal combination to control trade, has practically gone out of 
existence. 

When one company sells out to another, as in the case of the Central Canning & Drying Co., 
the change of management may, however, be merely nominal, the same men may, as employees of 
the new company, continue to direct the affairs of the business, as before, and there might not be, 
and probably would not be, any noticeable change in the ordinary routine of the company affairs. 
Very likely, the same operating books would continue to be used, but the bookkeepei would, of 
course, have nothing to do with the general corporation affairs, which would be administered at the 
central office of the purchasing company. 

Sometimes, also, the financial management of the business is conducted at the central office, the 
local establishment concerning itself only with the business of manufacture. 

And now, at the conclusion of his work, it may be well again to remind the student that the 
methods of corporation and manufacturing business and accounting, as presented in this course, are 
by no means assumed to be the only, or even the best ones that might be employed. Probably no 
two business concerns would conduct their affairs or keep their books in quite the same way. 

Accountants in these establishments learn, by trial and experience, what forms of books and 
what accounting devices are best suited to the special conditions of the business. 

It is believed, however, that the present course, if the student has performed his work faithfully, 
will have made him fairly familiar with the more important of the principles and methods that would 
be likely to be employed under the conditions given, and that this knowledge may prove of the 
greatest service to him, should he ever engage in commercial pursuits. 



INDEX. 



PAGE. 

Articles of Incorporation 2 

Form of 10, 11 

Assessments, Definition of 3 

Levying and Collecting 7, 8 

Notices of 8 

Assessment Book 7 

Form of 17 

Bill, Form of 37 

Bonds 4 

By-Laws, Should Include What 48 

Bonus. Definition of 4 

Cash Book, Special Column, Description and 

Form of 38, 39 

Central Canning and Drying Company, Organ- 
ization of 29, 30 

Charter, Definition of 1 

Closing Entries 58 

Closing Ledger Accounts 58 

Closing the Books, Instructions for 55 

Close Corporations 5 

Commercial Travelers' Expense Bills 47 

Corporations 1-8 

Books Required for the Organization of. 5, 6 

Classification of 1 

Dissolution of 66 

Exercises in Journal and Cash Book En- 
tries 25, 26 

Finances 3 

Liabilities of 3 

. Opening Books of, Under Various Condit- 
ions 19, 24 

Powers and Liabilities of 2, 3 

Procedure in the Organization of 1 

Corporation Accountancy 5 

Dividends, Definition of 3 

Declaring and Distributing 8 

Dividend Book, Form of 17 

Donated Stock, Disposalof and Entries Requir- 
ed 24 

Double Liability Corporations 3 

Earnings 4 

Franchise, Definition of 4 

Franchise Account 20 

Funds, Definition of 4 

Glen dale Creamery Company, Memoranda of 

Transactions 9—18 

Glendale Creamery Company, Entries for. . 18, 19 

Interest Account, Inventories and Gains of 55 

Installment Book, Form of 13 

Installments, Definition of 3 

Installment Certificates, Transfer of 7 

Form of 12 



PAGE. 

Installment Certificate Book 6 

Installment Ledger, Description of 6 

Form of 14 

Journal, Six Column, Form of 33 

Limited Corporations 3 

Minute Book, Example of 9 

Minutes of Corporation Meetings 2 

Model Trial Balance and Statement 56, 57 

Open Corporations 5 

Operating Books 5 

Petty Expense Book, Description and Form of 39 

Promotion 1 

Protested Paper, Disposal of 64 

Quotation Lists 36 

Raw Products, Purchase of in Canning Busi- 
ness 44 

Recording Sales of Merchandise 36 

Review Quiz 27, 28 

Sales Journal, Description and Form of 36, 37 

Sales of Merchandise, Procedure, Etc 38 

Single Liability Corporations 3 

Six Column Journal, Description and form of .33, 36 

Stock, Definition of 1 

Classification of 4 

Transfer of 6, 7 

Stock Certificates 6, 15 

Transfer of 7 

Stockholders, Liabilities of 3 

Stockholders' Ledger 6, 16 

Stock Subscription Agreement 2, 9, 10 

Subscription Account, Entries for 18, 23, 24 

Terms of Sale , 36 

Time Book, Description and Form of 40 

Treasury Stock, Definition of 4 

Journal Entry for 19 

Sale of, at a Premium or Discount 19 

Retirement of 22 

Trusts, Distinguished from Corporations 67 

Voucher System 31 

Voucher, Form of 32 

Disposal of 35 

Voucher Check, Form and Description of... 52, 53 
Voucher Payable Register, Form and Descrip- 
tion of 34, 35 

Voting and Elections 3 



Unlimited Liability Corporations. 



MAR 11 1907 






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